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Draft regulations confirm restriction of 50% on carried-forward losses.
HMRC has published draft legislation confirming that from 1 April the tax treatment of specified types of carried-forward losses for corporation tax purposes will be restricted to 50%. See here.
The limit will apply to carried-forward losses incurred at any time. Each standalone company or group will be entitled to a £5m annual allowance of unrestricted profit. According to HMRC this will ensure most companies are unaffected.
Losses arising from 1 April 2017 when carried forward will have increased flexibility and will be able to be set against the total taxable profits of a company and its group members (known as ‘loss relaxation’).
The new rules will have effect for accounting periods ending on or after 1 April 2017.
The loss restriction and loss relaxation will apply to trading losses non-trading deficits on loan relationships management expenses UK property losses and non-trading...
