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Consultation on corporation tax loss relief reforms

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HMRC is consulting until 18 August 2016 on the detail of two specific changes to corporation tax loss relief, announced at Budget 2016. From April 2017:

·       losses can be carried forward and set against the taxable profits of different activities within a company and the taxable profits of its group members; and

·       the amount of annual profit that can be relieved by carried-forward losses will be limited to 50%, subject to an allowance of £5m per group.

Relief for carried-forward trading losses arising before 1 April 2017 will be restricted to 50% of trading profit, whereas relief for carried forward trading losses arising after 1 April 2017 will effectively be restricted to 50% of profit across the group. There will be no limit on losses carried back. The reforms will be confined to trading losses, non-trading loan relationship deficits, UK property losses, management expenses and non-trading losses on intangible fixed assets.

The distinct treatment of capital losses will remain. The consultation also covers interaction with the existing restriction on banks’ losses. See

Issue: 1311
Categories: News