Consultation outcome

Reforms to corporation tax loss relief: consultation on delivery

From:: HM Treasury and HM Revenue & Customs
Published: 26 May 2016
Last updated: 5 December 2016 — See all updates

Read the full outcome

Reforms to corporate tax loss relief: response to the consultation

Ref: ISBN 978-1-911375-47-0, PU2016

PDF, 375 KB, 39 pages

Detail of outcome

At Budget 2016 the government announced that it will restrict the amount of profit that can be offset by carried-forward losses to 50% from 1 April 2017, whilst allowing greater flexibility over the types of profit that can be relieved by losses incurred after that date. The government ran a consultation on the reforms over the summer and, in responding to this, will take steps to address unintended consequences and simplify administration of the new rules.

Original consultation

Consultation description

At Budget 2016 the government announced two major reforms to the loss relief rules.

losses arising from 1 April 2017 can be carried forward and set against the taxable profits of different activities within a company and the taxable profits of its group members
the amount of annual profit that can be relieved by carried-forward losses will be limited to 50% from 1 April 2017, subject to an allowance of £5 million per group

These reforms will provide for a more flexible loss relief regime for the majority of UK businesses, one that is competitive with those in other G7 countries and better aligned with how businesses operate.

The government is now seeking views on the detailed design and implementation of the new rules.

This consultation is open until 18 August 2016 and the government will consider responses in the drafting of the legislation for Finance Bill 2017.

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