CFM32048 - Loan relationships: taxing and relieving provisions: reform of Corporation Tax loss relief: relaxation of non-trade deficits from loan relationships: relief against non-trading profits only

CTA09/S457, CTA09/S463A, CTA09/S463H

Unrelieved non-trading loan relationship deficits (NTLRDs) incurred before 1 April 2017 are carried forward and set against non-trading profits only (s457). This also applies to NTLRDs incurred by charities, whether before or after 1 April 2017 (CTA10/S463A(1)(b)).

In addition, where a company that is not a charity incurs NTLRDs from 1 April 2017, it will be unable to carry unrelieved amounts forward from the deficit period under CTA10/S463G or from a later period under CTA10/S463I in conjunction with 463G, if relief has been unavailable for any of the following reasons:

  • The company was a company with investment business immediately before the deficit period, and that investment business became small or negligible in the deficit period (s463G(3)(b)). 
  • The company was a company with investment business immediately before a later period, following the deficit period, and the investment business became small or negligible in the later period (s463I(1)(c)(i)).
  • The company is a general insurance company and the period to which it intends to carry forward NTLRDs is an {excluded accounting period}, as defined at CTA10/269ZG) (s463G(5), s463I(1)(d)).
  • The company is a Solvency 2 insurance company and the whole or a part of the deficit is a {shock loss}, as defined at CTA10/S269ZK.

Instead, the NTLRDs may be carried forward and set against non-trading income of the next accounting period (s463H(4)).

Later periods

S463H(10)

In general, where relief has become available for an NTLRD under s463H, the company can continue to carry forward unrelieved amounts to later periods. However, if the company ceases to be a company with investment business in any period, it will no longer be able to carry NTLRDs forward from that period to any subsequent period under s463H.

 

Claims

CTA09/S458, S463H(7)-(8)

Where a company has an NTLRD carried forward under s457 or s463H, the deficit will automatically be set against non-trading profits.

However, the company can make a claim to prevent this. They can do so where losses are carried forward under either section.

For deficits carried forward under s457, the claim is made under CTA09/S458 (CFM32040). This is unchanged by the reform of Corporation Tax loss relief introduced in [F(No 2)A17].

For deficits carried forward under s463H, the claim is made under s463H(7).

The company can claim for none of the deficit under the relevant section to be relieved. They can also claim for a part of the deficit to be relieved. The remainder will generally be carried forward to the subsequent period, provided that the company does not cease to be a company with investment business.

Claims under s463H(7) must be made within two years of the end of the period affected or such further period as HMRC allows (s463H(8)). Subject to this time limit, the general rules for claims under Corporation Tax self-assessment described in CTM90600 onwards apply.