Tax Advisory Manager Abbey Tax Protection
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Budget 2021: CT losses have extended carry back


Katherine Ford examines the new carry back rules for corporate trading losses. These are similar to the changes for income tax losses, but there are key differences for groups of companies.

17th Mar 2021
Tax Advisory Manager Abbey Tax Protection
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You may remember a similar measure for carrying back corporate losses was available to companies for trading losses which arose between November 2008 and November 2010, but this time the rules are more complicated.

Existing rules

To recap the existing rules available to companies for relieving a trading loss are:

  1. Set the loss against its own total profits (including capital gains) of the same accounting period. Any remaining loss can then be carried back against profits of accounting periods ending in the previous 12 months (CTA 2010 s37).
  2. Surrender loss as group relief (CTA 2010 Part 5).
  3. Carry forward the loss where it can be:
  • deducted against total profits – if it arose from 1 April 2017 onwards, subject to certain conditions (CTA 2010 s45A)
  • set against profits of the same trade (CTA 2010 s45 or s45B), or
  • surrendered under the group relief for carried forward losses rules (CTA 2010 Part 5A).

The deduction of losses brought forward is limited by the corporate loss restriction - £5m deductions allowance plus 50% of profits above that (CTA 2010 Part 7ZA).

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Replies (1)

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By Taxbod
05th May 2021 09:30

HMRC has updated their guidance today as follows. What should particularly be noted is that a claim may not be made until Royal Assent which is not expected until mid July :

Making a de minimis claim

If a company wishes to make a de minimis claim outside the company tax return, you should send a letter to the company’s usual HMRC contact address for Corporation Tax, setting out all the relevant information such as:

*company name and UTR
*details of the accounting period during which the loss was incurred
*evidence of the loss incurred in the form of draft management accounts
*details of the amount of the loss to be carried back to the relevant periods
*company bank details for repayment purposes

Claims should not be made until the Finance Bill receives Royal Assent which is expected to take place around mid-July.

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