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Carried-forward losses: further draft guidance

printer Mail

HMRC has published a second tranche of the draft guidance on changes to the treatment of carried-forward corporation tax losses from 1 April 2017. This part of the guidance covers group relief and the relaxation of carried-forward non-trade losses. The first tranche of draft guidance, published in July 2017, focused on the core rules and other aspects where guidance had been specifically requested. HMRC says it will issue amended and further draft guidance in due course.

The legislation, contained in Schedule 4 to the second Finance Bill 2017, is to have retrospective effect from 1 April 2017 and has two main aims:

  • restriction: limiting to 50% the amount of profit which can be relieved using carried-forward losses for companies with profits above £5m; and
  • relaxation: allowing most carried-forward losses arising from 1 April 2017 to be used more flexibly against the total taxable profits of a company and its group members, without the strict distinction between trading and non-trading profits.

The rules apply to all companies and unincorporated associations subject to corporation tax.

HMRC invites comments on the draft guidance by 5 January 2018. See