»Ê¹ÚÌåÓýapp

Finance (No.2) Act 2017

»Ê¹ÚÌåÓýapp reform of Corporation Tax loss relief was introduced in F(2)A17.

»Ê¹ÚÌåÓýapp reform has two aims:

• To restrict the amount of loss relief available to businesses with substantial profits, (the restriction) (CTM05000); and
• To allow most carried-forward losses arising from 1 April 2017 to be used more flexibly against the total taxable profits, rather than particular types of profits, of a company and its group members (the relaxation) (CTM04840).

Who is affected?

»Ê¹ÚÌåÓýapp rules relating to both the restriction and relaxation apply to all companies and unincorporated associations that pay Corporation Tax (CT) and have carried-forward losses.

In practice, where a company or, if a company is in a group, the group of companies, has profits up to the level of their deductions allowance (CTM05120), the relief they can obtain for carried-forward losses will be unaffected by the restriction but will still benefit from the relaxation.

When does it apply?

»Ê¹ÚÌåÓýapp rules apply from 1 April 2017:

• »Ê¹ÚÌåÓýapp restriction applies to restrict relief for carried-forward losses incurred in any period against profits arising from 1 April 2017.
• »Ê¹ÚÌåÓýapp relaxation applies to carried-forward losses arising from 1 April 2017. Losses that arose before that date do not benefit from the relaxation in any period.

Accounting periods straddling 1 April 2017 are subject to commencement provisions (CTM04880).

From 1 April 2020, the restriction is extended to include capital losses carried forward (FA20/SCH4).