CTM05020 | Corporation tax: restriction on relief for carried-forward losses: restricted losses
From HM Revenue & Customs · Company Taxation Manual
, S269ZC (2), S269ZD (3), S269ZBA (2)
Carried-forward trading losses,
Carried-forward non-trading loan relationship deficits (NTLRDs),
Carried-forward UK property business losses,
Carried-forward management expenses,
Carried-forward non-trading losses on intangible fixed assets (NTLIFAs)
In addition, from 1 April 2020:
Capital losses carried forward in accordance with .
Further detail is provided below.
The restriction does not apply to relief for in-year losses (such as group relief under ) or for losses carried back from a later accounting period (such as trading losses under ). It only applies to relief for carried-forward losses.
The restricted losses can be divided into:
Streamed losses, that are carried forward for deduction from certain types of profit only, specified at S269ZB (3), S269ZC (2), plus, from 1 April 2020, S269ZBA (2), and
Relevant deductions, specified at .
These are amounts carried forward for deduction from the total profits of the company.
Streamed losses
The restriction applies to the following streamed losses:
NTLRDs carried forward for deduction from non-trading profits only ( or S463H (5)),
Trading losses carried forward for deduction from profits of the same trade only ( or S45B),
Deductions from trading profits under or S303D (5) for excess carried-forward non-decommissioning losses of a ring fence trade in the oil and gas industry, where certain conditions are met ( and (4)), and
From 1 April 2020, capital losses carried forward for deduction from chargeable gains under .
Relevant deductions
The restriction applies to the following losses carried forward for deduction from total profits, referred to at S269ZD (3) as the relevant deductions:
Trading losses carried forward for deduction from total profits (),
NTLRDs carried forward for deduction from total profits (),
Non trading losses on intangible fixed assets carried forward (),
Management expenses carried forward ( and ),
UK property business losses carried forward ( or in conjunction with ),
Deductions under as group relief for carried-forward losses,
Deductions for losses of creative industries made under or under in reliance on , S1216DB (3), S1217DB (3), S1217MB (2), S1217SB (2) or S1218ZDB (2),
Deductions from total profits under for excess carried-forward non-decommissioning losses of a ring fence trade in the oil and gas industry,
Deductions under for excess carried-forward Basic Life Assurance and General Annuity Business (BLAGAB) trade losses.
From 6 April 2020, non-resident companies are chargeable to Corporation Tax instead of Income Tax on profits from UK property. Income tax losses that are carried forward to the Corporation Tax regime at 6 April 2020 are not restricted ().
Exclusions and special rules
For BLAGABs, the policyholders' share of BLAGAB profits is excluded from the loss restriction.
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
When brought into effect, devolution of power to the Northern Ireland Assembly will allow the Northern Ireland Executive to set its own rate of Corporation Tax for trading profits arising in Northern Ireland. The rules will apply to the Northern Ireland regime (). HMRC draft guidance NICT01030 available on gov.uk deals with coming into effect.