The Government announced two changes to Corporation Tax Loss Relief from 1 April 2017.

At the moment corporation tax losses carried forward can only be used by the same company and not by other companies in their group. In addition, currently some losses can only be used against the same types of future income so, for example, trading losses can only be offset against future profits of the same trade.

Following the Budget, losses incurred on or after 1 April 2017 by a company will be able to be carried forward and set against profits from other income streams or from other companies within a group.

The second change is that the government will restrict the amount of taxable profit that can be offset through losses carried forward. From 1 April 2017 the government will restrict to 50% the amount of profit that can be relieved by brought forward losses. The restriction will only apply to profits in excess of £5m, although this £5m will apply on a group-wide basis.

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