CFM32047 - Loan relationships: taxing and relieving provisions: reform of Corporation Tax loss relief: relaxation of non-trade deficits from loan relationships: carry-forward against total profits

CTA09/S463G, CTA09/S463I

In general, non-trading loan relationship deficits (NTLRDs) incurred by companies (excluding charities) from 1 April 2017 can be carried forward and set against total profits of later accounting periods under s463G and s463I. 

S463G allows NTLRDs to be carried forward for relief against total profits of the period immediately following the period in which the deficit was incurred.

S463I operates in conjunction with s463G to allow NTLRDs to be carried forward for relief against total profits of subsequent periods.

Amount available for relief

The amount of NTLRDs available for relief under s463G and s463I is:

  • the amount of deficit which has arisen from non-trading loan relationships 

less any amount for which relief has been given  

  • in periods prior to the deficit period, 
  • in the deficit period,  
  • in periods after the deficit period but prior to the period for which relief is claimed, or
  • as group relief under CTA10/PART5 or as group relief for carried-forward losses under CTA10/PART5A (s463G(2), s463I(1)(b)). 

Conditions of relief

NTLRDs can only be carried forward for relief against total profits where they fulfil a number of conditions:

  • The deficit must not have been incurred prior to 1 April 2017 (CTA09/S463A(1)(a)).
  • The company that incurred the deficit must not be a charity (s463A(1)(b)).
  • The company must not have ceased to be a company with investment business in the deficit period or if later the accounting period from which the deficit is carried forward (s463G(3)(a), s463I(1)(c)(i)).
  • If the company was a company with investment business immediately before the deficit period, the investment business must not have become small or negligible in the deficit period (s463G(3)(b)). 
  • If the company was a company with investment business immediately before a later period, following the deficit period, from which the company wishes to carry the deficit forward under s463I, the investment business must not have become small or negligible in the later period (s463I(1)(c)(i)) 
  • If the company is a Solvency 2 insurance company, the deficit must not be wholly a {shock loss}, as defined at CTA10/S269ZK. If the loss is partly a shock loss only that part which is not a shock loss may be available for set off against total profits (s463G(4)). 
  • If the company is a general insurance company, NTLRDs cannot be carried forward for relief against total profits of an {excluded accounting period}, as defined at CTA10/s269ZG) (s463G(5)). 
  • No relief can be given under s463G or s463I against ring fence profits within CTA10/PART8 or contractor’s ring fence profits within CTA10/PART8ZA of companies in the oil and gas industries (s463G(11)). In certain circumstances where relief has been unavailable against total profits, companies may be able to {set carried-forward NTLRDs against non-trading profits only} under CTA09/S457 or CTA09/S463H.

Claims

S463G(7)-(10)

Relief under s463G and s463I is not automatic. A company must make a claim for carried-forward NTLRDs to be relieved under these sections against total profits.

The claim can be for the whole or part of the amount available for relief. This means the company may choose to set off the whole, part or, by making no claim, none of the amount available. 

The claim must be made within 2 years of the end of the period in which the company wishes to utilise the deficit or such further period as HMRC allows. Subject to this time limit, the general rules for claims under Corporation Tax self-assessment described in CTM90600 onwards apply.