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CTM04820 | Corporation Tax: CT loss reform: scope

From HM Revenue & Customs · Company Taxation Manual

The changes to relief for carried-forward losses in F(2)A17/ apply to all companies and unincorporated associations that pay Corporation Tax.

Relief for in-year losses (such as group relief under ) and losses carried back from a later accounting period (such as trading losses under ) are not affected.

Carried-forward losses affected

The restriction () and relaxation () apply to the following losses which are also known as ():

  • Non-trading loan relationship deficits (NTLRDs) carried forward ()

  • Trade losses carried forward ()

  • Non-trading losses on intangible fixed assets carried forward ()

  • Management expenses carried forward ( and )

  • UK property business losses carried forward ( and )

The restriction (but not the relaxation) also applies to the following types of loss:

  • Pre-1 April 2017 trading losses ()

  • Post-1 April 2017 trading losses that can only be set against trading income ()

  • Pre-1 April 2017 NTLRDs and those that arise at any time to a company that is a charity ()

  • Post-1 April 2017 NTLRDs that can be set only against non-trading profits ()

For accounting periods beginning on or after 1 April 2020 the restriction also applies to:

  • Capital losses that arose at any time that are set against net capital gains ()

Exclusions and special rules

For companies carrying on basic life assurance and general annuity business (BLAGAB), the policyholders' share of BLAGAB profits is excluded from the loss restriction ( and ).

The loss relief rules are modified in the way in which they apply to qualifying production/development companies that fall within the scope of creative industry tax reliefs ( to PART15E) ().

Special rules apply to losses arising from ring fence activities and oil contractor activities in relation to the North Sea oil and gas regime ( and ).

Northern Ireland

Devolution of power to the Northern Ireland Assembly potentially allows the Northern Ireland Executive to set a lower rate of Corporation Tax for trading profits arising in Northern Ireland. This requires the exercise of various regulation-making powers and a resolution setting a rate by the Northern Ireland Assembly. The CT loss reform will apply to the Northern Ireland regime if it is implemented ().