CTM82140 | Reform of Corporation Tax loss relief: Group relief for carried-forward losses: Claimant company’s relevant maximum
From HM Revenue & Customs · Company Taxation Manual
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The amount of group relief for carried-forward losses that can be claimed is limited to the lower of:
The (), and
The claimant company’s for the less for the same period ().
Relevant maximum calculation
The claimant company's relevant maximum is determined as follows:
Step 1
Calculate the relevant maximum for the claim period in accordance with the ().
Step 2 (a)
Deduct from the relevant maximum any losses or other amounts the company has already claimed for the period listed in parts (a) to (d) of Step 2 in s188DD(1), under:
or 45B(4) (see Step 2 (b) below)
or 303D by virtue of
CTA09S457(3) or 463H(5).The deduction under section s463H(5) does not include deduction of a shock loss ()
, 124A(5) or 124C(6), and
any deductions within to (i) and (k).
Step 2 (b)
For Step 2 (a) above, exclude any deductions under s45(4)(b) or s45B(4) that would be ignored for the purposes of . These are:
losses of film trade under , 1210(5A) or 1211(7A)
losses of television programme trade under , 1216DB(5A) or 1216DC(7A)
losses of video game trade under , 1217BD(5A) or 1217DC(7A)
losses of theatrical trade under or 1217MC(9)
losses of orchestral trade under OR 1217SC(9)
losses of museum or gallery exhibition trade under or 1218ZDC(9)
losses of UK or EEA furnished holiday lettings business under CTA10/S65(4B) or 67A(5A) (note that the Furnish Holiday Lettings regime has been abolished with effect from 1 April 2025)
insurance companies: shock losses under
certain ring fence trades losses under
pre-1 April 2017 loss arising from oil contractor activities under
Step 3
Take the proportion of the claim period included in the overlapping period and apply that to the amount arrived at after Step 2. Time apportionment basis should be used unless this gives an unjust or unreasonable result, in which case another method which would give a just and reasonable result is to be used instead ().
Relevant maximum calculation for company with qualifying profit lower than the deductions allowance
When a claimant company has qualifying profits for the claim period that are less than its for the same period, the relevant maximum calculation is modified as follows:
Step 1
Calculate the qualifying profits for the claim period in accordance with .
Step 2
Deduct from the qualifying profit any losses or other amounts the company has already claimed for the period as listed in Step 2(a) above. For this purpose, a deduction made under or 45B(4) of the types of loss listed in Step 2(b) should be included. The effect of this is that the losses that will be deducted are any that have been claimed for the period whether or not they are subject to the loss restriction.
Step 3
Take the proportion of the claim period included in the overlapping period and apply that to the amount arrived at after step 2. Time apportionment basis should be used unless this gives an unjust or unreasonable result, in which case another method which would give a just and reasonable result is to be used instead ().
Qualifying profits
To calculate the qualifying profits:
Take the calculated in Step 1 of , and
deduct
the such as group relief, but not
Example 1: Relevant maximum calculation
In this example, losses have been time apportioned on a monthly basis for simplicity. Normally, time apportionment should be made by reference to days.
Company A and Company B are members of the same group of companies for group relief purposes throughout the relevant periods.
Company A has a 12 month accounting period (AP) ending 31 December 2019. For that period, it makes a claim for relief from total profits for its carried-forward trading losses of £20,000 and carried-forward non-trading loan relationship deficits (NTLRDs) of £10,000. It also makes a claim for group relief for carried-forward losses from Company B. Company B has carried forward post-1 April 2017 losses of £50,000 to its 12 month AP ending 30 September 2019. Company A’s for the ending 31 December 2019 calculated in accordance with section 269ZD(4) is £150,000.
The relevant maximum for the overlapping period is calculated as follows:
Step 1
The calculated in accordance with section 269ZD(4) for the AP ending 31 December 2019 is £150,000.
Step 2
From the relevant maximum deduct the losses already claimed for the period:
| Description | Amount |
|---|---|
| Relevant maximum | £150,000 |
| Carried-forward trading losses | (£20,000) |
| Carried-forward NTLRDs | (£10,000) |
| - | £120,000 |
Step 3
The amount after Step 2 is apportioned by reference to the proportion of the claim period included in the overlapping period, which is 9 months from 1 January 2019 to 30 September 2019.
£120,000 x 9/12 = £90,000.
The relevant maximum for the overlapping period is £90,000.
Example 2: Relevant maximum calculation for company with qualifying profit lower than the deductions allowance
Companies C and D are members of the same group of companies for group relief purposes.
Company C has qualifying profits of £200,000 and a of £250,000 for the 12 months AP ending 31 December 2019. For this period, it makes a claim for relief from total profits for its own carried-forward trading losses of £60,000 and a claim for group relief for carried-forward losses from Company D. Company D carried forward post-1 April 2017 losses of £100,000 to the 12 month AP ending 30 June 2019.
Step 1
Company C's qualifying profit of £200,000 for AP ending 31 December 2019 was calculated in accordance with section 188DD(3A).
Step 2
From the qualifying profit deduct the losses already claimed for the period:
| Description | Amount |
|---|---|
| Qualifying profit | £200,000 |
| Carried-forward trading losses | (£60,000) |
| - | £140,000 |
Step 3
The amount after Step 2 is apportioned by reference to the proportion of the claim period included in the overlapping period, which is 6 months from 1 January 2019 to 30 June 2019.
£140,000 x 6/12 = £70,000.
The relevant maximum for the overlapping period is £70,000.