»Ê¹ÚÌåÓýapp

CTA09/PART8/S753

Where the aggregation of non-trading debits and credits described in CIRD13530 results in a loss (a ‘non-trading loss�) a company may make a claim to set off all or part of that loss against its total profits for the accounting period in which the loss arises.

»Ê¹ÚÌåÓýapp claim must be made within two years of the end of that accounting period or within such period as HMRC allow. »Ê¹ÚÌåÓýapp approach in CTM90610 should be applied to claims made outside the two year time limit.

Subject to that, the general rules for claims under CT self-assessment described in CTM90600 onwards apply.

Carried forward non-trade losses

For periods before 1 April 2017

Any unused non-trade losses on intangible fixed assets (NTLIFAs) arising before 1 April 2017 are treated as a non-trading debit of the next period. This includes brought forward losses arising before 1 April 2017 and treated as non-trading debits in the first accounting period beginning on or after 1 April 2017.

Any brought forward NTLIFAs that are treated as non-trading debits arising in the later period are aggregated with non-trading debits and credits of that next period.

From 1 April 2017

»Ê¹ÚÌåÓýapp loss reform rules (F(2)A17/S18) changed the way that brought forward non-trading losses are dealt under CTA09/PART8. »Ê¹ÚÌåÓýapp main change is that NTLIFAs arising from 1 April 2017 are no longer treated as non-trading debits arising in a later period. This means the NTLIFAs retain their identity as a loss in subsequent periods and are not aggregated with the non-trading debits and credits of that later period.

Note that in the first period following the change from 1 April 2017 the NTLIFA arising in that period may include non-trading debits that arose in an earlier period as a consequence of the previous rule in CTA09/S753(3). That brought forward NTLIFA will initially be treated as a non-trading debit arising in that period.

This example illustrates the effect of the change to the aggregation rule for brought forward NTLIFAs.

Accounting period	1/4/16 - 31/3/17	1/4/17 - 31/3/18	1/4/18 - 31/3/19
Non-trading credits	100	200	150
Non-trading debits	400	500	600
Non-trading debit b/f	Nil	300	-
NTLIFA	300	600	450
NTLIFA b/f (from 1/4/17)	-	-	400
NTLIFA used	Nil	200	850
NTLIFA to c/f	300	400	Nil

Note: Although the legislation is effective from 1 April 2017, the NTLIFA arising in the period to 31 March 2017 (£300) is treated as a non-trading debit of the later period and subject to the aggregation rule. »Ê¹ÚÌåÓýapp NTLIFA arising in the period ended 31 March 2018 is the first year to which the change to the aggregation rule will apply.

»Ê¹ÚÌåÓýapp example reflects that the unused loss arising in the period ended 31 March 2018 is carried forward and treated as a loss in the later period. In the period ended 31 March 2019 both losses can be utilised, e.g. the in year loss of £450 plus the b/f loss of £400.

Loss reform

»Ê¹ÚÌåÓýapp loss reform rules are explained in more detail in Company Tax manual (CTM04800+) but a summary of the main changes are:

• Brought forward NTLIFAs are subject to the loss restriction rules introduced by F(2)A17 from 1 April 2017. Brought forward losses (which arose at any time) cannot reduce profits by more than 50%, subject to an allowance of £5 million per company or group.
• Brought forward NTLIFAs can be used more flexibly from 1 April 2017 (see CIRD13550). For example, brought forward NTLIFAs can be group relieved under CTA09/PART5A like other losses. Note however this more flexible treatment only applies to NTLIFAs arising on or after 1 April 2017.

In summary; NTLIFAs may still be set against total profits of that accounting period or surrendered as group relief (CIRD13550). But from 1 April 2017 any unrelieved NTLIFA is carried forward and treated as a NTLIFA of the following accounting period, rather than a non-trading debit of that later period.

But NTLIFAs arising after 1 April 2017 cannot be carried forward from an accounting period in which the investment business ceases. (CTA09/s753(4))