In Budget 2021 the Chancellor announced changes to the corporate tax loss rules for group, some with retrospective effect.

These changes take effect for accounting periods beginning on or after 1 April 2021 unless overwise flagged. 

The changes have been made to ease the administrative burden as well as some technical changes to make legislation work as intended by:  

  • Removing the requirement for a nominated company to file a group allowance statement where no carried forward losses have been used in the period.
  • Extending the definition of a change of ownership.
  • Allowing a company to be nominated to file a group allocation statement for periods up to the date the group ceased to exist. This will allow the group to have a deductions allowance for the period.
  • Allowing carried forward losses to be surrendered via group relief by a company that has fully covered its profits.
  • Amending loss restriction calculations to ensure only losses claimed are included and profits capped if the deductions allowance exceeds them (retrospective from 1 April 2017).
  • Extending time limits to file an original group allowance statement in line with the enquiry window.

Useful guides on this topic

Groups: At a glance
What qualifies as a group for tax? How do you form a group? Which definition of a group applies for different types of tax? How does group relief work?

Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?

External links

HMRC: Changes to the reform of loss relief rules for Corporate Tax

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