Under current legislation, corporation tax losses carried forward can only be used by the company that incurred the loss, and some losses carried forward can only be set against profits from certain types of income. Therefore, proposals for more flexible relief of losses arising after 1 April 2017 are to be welcomed.  If implemented as set out in the consultation document, this would enable companies to use carried forward losses against profits from other income streams or from other companies within a group.

Although less positively, the proposals intend to restrict the use of losses arising before 1 April 2017 to a maximum 50% of profits, this restriction will only apply after relieving the first £5m of losses at 10%. In consequence, the vast majority of owner managed businesses will not be adversely impacted.

If you would like to discuss, or want advice, please call and speak to Andrew Wilson, Partner on 01788 539000.