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CTA09/S463B(1)(a) and S463B

Claims to set deficit against profits of the same period

A claim to set non-trading deficits against profits of the same period can be made under S463B(1)(a). »Ê¹ÚÌåÓýapp conditions for such claim are set out in S463D.

»Ê¹ÚÌåÓýapp company can set all or part of the current year’s deficit against the company’s current year profits of any description, whether trading or non-trading, except ring-fenced profits for oil companies.

A claim can be made for the whole or part of the non-trading deficit. This allows companies to maximise their double tax relief (see the example below).

Interaction with other reliefs

CTA09/S463D gives the order in which the reliefs are given. »Ê¹ÚÌåÓýapp non-trading deficit is set against the profits of the same period before relief for:

• trade losses, setting against profits of the same period or carried back from a later period under CTA10/S37, or
• property losses, setting against total profits of the same period under CTA10/S62, or
• non-trading deficit carried back from a later period under CTA09/S463B(1)(b).

Pre-2017 non-trading deficits

For non-trading deficits arising before 1 April 2017, there was an equivalent provision at CTA09/S461.

Where the non-trading deficit arise in an accounting period begins before 1 April 2017, the setting off against profits of the same period must also be after the relief for any amounts of deficits brought down from earlier periods.

Where a company has an accounting period that straddles 1 April 2017, the periods falling before and after that date are treated as separate accounting periods for the purposes of determining the pre-2017 and post-2017 amounts. See CTM04880 for further details.

Set-off in the year: example

A UK company has the following income and expenditure for the year ended 31 March 2018.

Income or Expenditure	Amount
UK trading income	£400,000
Overseas dividend	£200,000 (foreign tax paid £36,000)
Non-trading deficit	£500,000 from loan relationships

To maintain maximum foreign tax credit relief the company claims for £400,000 of the deficit to be set against the trading profits and for a further £20,000 of the deficit to be set against the overseas dividend as follows.

-	Trade profits	Dividend	Total
-	400,000	200,000	600,000
Part deficit claim (of year)	- 400,000	-10,526	-410,526
Profits	0	189,473	189,473
CT@19%	-	-	36,000
Tax credit relief	-	-	36,000
CT payable	-	-	Nil

»Ê¹ÚÌåÓýapp remaining £89,473 (£500,000 - £410,526) of the deficit is available to be carried back under S463B(1)(b). If the company does not make such a claim, it can be carried forward under CTA10/S463G.