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Corporation Tax Loss Relief changes kick in

When Corporation Tax Loss Relief changes came into force in April 2017, it wasn’t with a massive fanfare. However, as we now start to deal with accounting periods where the impacts can be felt, we are increasingly being asked by clients what this will mean to them.

What are the changes?

There are two parts to the changes:

  1. Loss Relaxation: You will be able to set losses arising from 1st April 2017, when carried forward, against the total taxable profits of your company and any group companies.
  2. Loss Restriction: You will only be able to set carried-forward losses (whenever they arose) against up to 50% of profits. However, each company or group will be entitled to a £5 million annual allowance, and profits within the allowance will not be restricted. As a result 99% of companies are unaffected by the restriction.

Who will benefit?

Apart from charitable companies, all companies can benefit from the loss relaxation measures, although there are some specific rules around companies with insurance or investment business, creative industries and those whose activities are oil or gas related

How do the new rules work?

The new rules are complex, and affect a range of different loss types you may be managing in your business, including:

  • Trading losses
  • Non-trading loan relationship debits
  • Management expenses of an investment business
  • UK Property losses
  • Non-trading losses on intangible fixed assets

Our specialist business tax division can advise you on precisely how your organisation may be able to benefit from these new regulations to help you optimise your tax position.

In summary, all but the largest corporations should be able to feel some benefit from the new Corporation Tax Loss Relief rules. To discuss your needs with one of the experts from our Business Tax team, please call 01733 568123.