The corporate income loss restriction was introduced with effect from 1 April 2017. Under these rules, only 50% of a company’s profits or gains can be offset by carried forward income losses, subject to the application of a £5m deductions allowance. Capital losses are currently exempted from these rules. Budget 2018 announced a consultation process designed to align the rules on corporate capital losses with those on income losses. The consultation is designed to assist in the drafting of new legislation which will take effect from 1 April 2020. The consultation overviews how the corporate capital loss restriction may work mechanically. It also identifies a number of planning opportunities and sets out the measures which HMRC may wish to take to block them.
