From 1 April 2017 corporate tax losses (whether trading or non-trading) can be carried forward and set off against total profits.
Currently losses have to be streamed separately. For example, a trading loss brought forward can only be offset against future trading profits and not against interest receivable or a capital gain.
Losses arising pre- April 2017 will remain subject to the previous streaming rules but companies will have the flexibility to choose whether or not to use pre April 2017 losses before other available losses such as group relief or post April 2017 losses.
As always there is some anti-avoidance built in. A standalone company or a group with profits exceeding £5 million will only be able to use the carry forward losses against up to 50% of profits. Rules will also be introduced to prevent Groups buying a loss-making company simply to access post April 2017 tax losses.
No changes are being introduced for the treatment of capital losses. For companies capital losses continue to be relieved only against a chargeable gain.
For more information, please contact Lesley Sutton on 01484 550037 or email firstname.lastname@example.org.