BKM305300 - Bank loss restriction: Calculation of carried-forward reliefs available: calculation of relevant profit APs from 1/4/17 – trading and non-trading profits

Where neither the bank loss restriction nor the general loss restriction has effect, it is not usually necessary to differentiate between trading and non-trading profits when calculating “total profits” under CTA10/S4. However, the calculation of relevant profits requires that modified total profits (BKM305200, CTA10/S269ZF(3) step 1) are split into trading and non-trading.

Broadly, trading profits are those against which a company could in principle receive relief for trading losses carried forward for relief against profits of the same trade (under CTA10/S45 or S45B), and non-trading profits are the balance, that is total profits less trading profits.

Many banking companies only have trading profits and if this is the case, the company can move straight to deducting in-year reliefs (BKM305400).