UK and International Tax news

Updated Draft Legislation On Changes To Relief For Carried Forward Corporation Tax Losses

Tuesday 31st January 2017

HMRC has recently published updated draft provisions to be included in the 2017 Finance Bill which will change the rules applying to how corporation tax losses carried forward to future accounting periods may be used.

This updated draft legislation supersedes that published on 5 December 2016 as part of the draft Finance Bill 2017 clauses, and contains information on most of the remaining elements of the rules.

From April 2017 there will be a restriction on the amount of profit that can be sheltered by losses brought forward with an annual £5m allowance above which there will be a 50% restriction in the profits that can be offset by losses brought forward.

Banking companies are already subject to brought forward loss utilisation and there will be a lower permitted offset of 25% of profits which can be sheltered using pre April 2015 losses brought forward.

From April 2017, there will be greater flexibility in the types of profits which will be eligible for relief by losses arising after that date, and streaming of trading and non trading losses will be abolished.

The updated provisions include new rules for group relief of carried forward losses in companies owned by consortia and various anti avoidance provisions.

Updated Explanatory Notes have been published alongside the draft clauses and HMRC has requested that any comments on the draft legislation should be submitted by 23 February 2017.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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