Trading losses carried forward

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

The reform of corporate losses by Finance (No 2) Act 2017 included a mixture of relaxations to the use of losses within the previous regime which applied before 1 April 2017 and also a major restriction (50% above a certain limit) on the amount of profits after 1 April 2017 that can be covered by the offset of most losses carried forward, including pre-April 2017 losses.

This guidance note details the options for using trading losses carried forward and the 50% restriction is dealt with in the Carried-forward losses restriction guidance note. See also Simon’s Taxes at D1.1106 onwards.

HMRC guidance on the relaxation is at CTM04840 and on the restriction is at CTM04830.

Carried-forward trading losses arising on or after 1 April 2017

When a company incurs a trading loss on or after 1 April 2017, which has not been relieved against current or preceding year profits and also has not been surrendered as group relief, it can carry the loss (or the balance remaining after such claims) forward to the next accounting period for relief

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Trading losses carried forward

Trading losses carried forward