BKM303150 - Bank loss restriction: carried-forward reliefs to which restriction applies: relevant carried forward losses

CTA10/S269CN, S269CA(4), S269CB(4), S269CC(5) & (6)

The rules apply to three types of carried-forward relief, referred to together in the legislation (CTA10/s269CN) as relevant carried-forward losses. These are:

  • Pre-2015 carried-forward trading losses (CTA10/S269CA);
  • Pre-2015 carried-forward non-trading deficits (CTA10/S269CB); and
  • Pre-2015 carried-forward management expenses (CTA10/S269CC).

The bank loss restriction rules determine the amount of relief under the restriction and to the extent that an amount of relief is available under the restriction, it is given under the normal rules for that relief. Any relevant carried-forward losses which are not available for relief under the restriction, will continue to carry forward under the normal rules for that relief and within the restriction. BKM303250 covers the normal rules for the three carried-forward reliefs.

The relevant carried-forward reliefs are only subject to the bank loss restriction if they arise before 1 April 2015. A relief arises before 1 April 2015 if it was made in, or is referable to, an accounting period ending before 1 April 2015 and is carried forward to the current accounting period under the normal rules for that relief (BKM303250).

CTA10/S269CC(5)(a) and (6)(b) has further details of what is included in pre 2015 carried-forward management expenses:

  • management expenses made in an accounting period ended before 1 April 2015
  • qualifying charitable donations made for the purposes of a company’s investment business
  • amounts brought forward of these types of expenditure which cannot be used in a given period (CTA09/S1223(2)(b))
  • unused losses of a ceased UK property business (CTA10/S63 and PIM4230).

The restriction does not apply where the carried-forward reliefs:

  • arise before a company begins relevant regulated activity (BKM306400)
  • arise to a new entrant bank in its start-up period (BKM306500)
  • are designated as unrestricted through the allowance for building societies (BKM306700)

The rules include transitional provisions which split an accounting period straddling 1 April 2015 into two periods, one ending on 31 March 2015 and one commencing 1 April 2015. A loss arising in a straddling period will be restricted to the extent that it falls in the split period ending 31 March 2015. This is calculated on a time basis, unless that basis would be unjust or unreasonable (FA15/Schedule 2/paragraph 7) (BKM309100).