HMRC have published ‘Corporate Capital Loss Restriction: Consultation on delivery’ looking at proposals to restrict the use of carried forward capital losses for companies.

The consultation follows on from large-scale changes to Trading losses and the introduction of a 50% loss restriction for companies from April 2017.

The proposals under consultation, to take effect from 1 April 2020, are:

  • A restriction to the use of carried forward capital losses will be introduced.
  • The restriction will apply to companies with substantial capital gains and/or profits.
    • No more than 50% of capital gains arising in the accounting period can be offset by brought forward capital losses of a prior period.
    • The allowance of £5 million per group that was introduced for CILR will also cover capital gains that can be offset with carried-forward capital losses
    • Where gains are transferred from one group company to another to enable use of the losses, the 50% will apply to the capital gain transferred under the election.
    • The group would be able to decide how to allocate the loss restriction.
  • In-year capital losses will be fully available to offset gains in the same year.
  • Targeted anti-avoidance rules will be introduced:
    • They will negate any tax advantage from arrangements entered into before the restrictions commence, where the advantage arises after commencement, for example "bed and breakfasting" of assets.
    • They will have effect from 29 October 2018.
  • Transitional rules will apply where a company has an accounting period that straddles 1 April 2020:
    • It is proposed that the accounting period be split into two notional accounting periods, one ending on 31 March 2020, the other commencing 1 April 2020.
    • The restriction will apply only to gains arising in the notional period from 1 April 2020.

The closing date for comment is 25 January 2019. Comments should be sent to This email address is being protected from spambots. You need JavaScript enabled to view it..

Summary of questions

Chapter 3 - Proposed approach

Q1. Will the proposed model be effective in achieving the objective of allowing companies flexibility in allocation of the £5 million deductions allowance whilst making minimal changes to the CILR?

Q2. Could the computation process be made simpler?

Q3. Are there any specific issues relating to capital gains and losses that should be taken into account to ensure fairness in achieving the government objectives?

Q4. What could be done to reduce the administrative requirements of this restriction?

Chapter 4 - Anti-avoidance, commencement and transitional rules

Q5. Will the proposed transitional arrangements be effective in the introduction of the capital loss restriction?

Q6. Are there any issues that should be taken into account in the transitional arrangements?

Chapter 5 - Proposals for life assurance companies

Q7. What method of calculation should be used to ensure that the policy objective is met whilst providing a suitable method for life assurance companies?

Chapter 6 - Other considerations

Q8. Do you have any comments on this proposed model for oil and gas companies?

Q9. Are there any issues surrounding insolvency or cessation of trade that need to be taken into account in this reform?

Q10. Are there any sectors or types of corporate structure that you consider are particularly affected by this change?

Q11. Are there any other factors or specific issues that you consider need to be taken into account in this reform?

Chapter 7 - Assessment of impacts

Q12. Do you have any comments on the impacts identified in this Chapter?

Q13. Do you consider that there are any other impacts that should be taken into account?


Losses: trading and other losses

External link

Corporate Capital Loss Restriction – consultation on delivery