Company trading losses are computed in the same way as trading profits. Where the adjusted trading profit figure is a loss, the trade profit assessment in the corporation tax computation will be nil. This guidance note gives an overview of the different options for relieving company losses. Companies may have different options for relieving trading losses and it is important to consider the best utilisation of losses in light of the company's commercial objectives and in choosing the option that gives the most tax efficient result. For more information on this, see the Loss planning guidance note.
Reforms to corporation tax loss relief
Reforms to the tax loss relief legislation were announced at Budget 2016. The changes were introduced by Finance (No 2) Act 2017, ss 18-19 and Sch 4, which received Royal Assent on 16 November 2017, and they impact trading losses and almost all other types of income losses carried forward. A restriction has been introduced such that only 50% of profits in excess of £5 million can be offset by losses brought forward.