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CTM04115 | Corporation tax: trading losses: general: relief for losses carried forward: losses incurred from 1 April 2017: carry-forward against total profits

From HM Revenue & Customs · Company Taxation Manual

Unrelieved trade losses incurred on or after 1 April 2017 can be carried forward and relieved against total profits of the next accounting period under CTA10/45A.

This is subject to a number of conditions (CTA10/45A (1) to (3))

  • the company must continue to carry on the trade in the next accounting period,

  • the trade must not be an oil and gas ring-fence trade (CTA10/S277),

  • the trade must not have become small or negligible in the loss-making period,

  • the trade must be commercial or be carried on for statutory functions (CTA10/S44, CTM04600), in both the loss-making period and the period of relief, and

  • if the company is an insurance company, the loss must not be a shock loss (defined at CTA10/S269ZK) and the later period must not be an excluded accounting period of a general insurance company.

In addition, where relief has been unavailable under CTA10/S37 due to any of the following provisions, relief will likewise be unavailable under S45A where

  • the trade was carried on wholly outside the United Kingdom during the loss-making period (CTA10/S37(5)),

  • the loss was made in a trade of farming or market gardening and the company has made losses for the previous five or more years (CTA10/S48) (CTM40200, BIM85620),

  • the loss was made in a trade of dealing in commodity futures that falls under CTA10/S52, or

  • the loss was made in a pre-completion period of a separate film trade, separate programme trade, separate video game trade, separate theatrical trade, separate orchestral trade or separate exhibition trade (CTA09/S1209, CTA09/S1216DA, CTA09/S1217DA, CTA09/1217MA, CTA09/1217SA, CTA09/1218ZDA) - note that special rules applying to theses creative industries mean that when the relevant creative project, for example the film, is completed or abandoned, certain of these losses may become available for relief against total profits (CTA09/S1210, S1216DB, S1217DB, S1217MB, S1217SB, S1218ZDB).

In some circumstances, where a company is unable to carry forward a trade loss under S45A, for relief against total profits, it will be able to carry forward that loss under CTA10/S45B, for relief against profits of the same trade.

This will not be the case if relief is unavailable under S45A because the trade has ceased - a company cannot carry forward losses of a trade that has ceased.

However, if relief under S45A is unavailable for any of the other reasons given above, relief will be available under S45B provided the relevant conditions in S45B are met.