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HMRC internal manual

Banking Manual

Bank loss restriction: carried-forward reliefs to which restriction applies: relevant carried forward losses – normal rules

The bank loss restriction rules determine the amount of relief under the restriction and to the extent that an amount of relief is available under the restriction, it is given under the normal rules for that relief.  Any relevant carried-forward losses not available for relief under the restriction, will continue to carry forward under the normal rules for that relief and within the restriction. This page covers the normal rules for the three carried-forward reliefs.

Carried-forward trading losses

Trading losses not used in a given period are carried-forward and available against profits of the same trade (CTA10/S45; CTM04100).  This relief is automatic and the maximum amount within the restriction should be set off against relevant trading profits (see BKM303200

Carried-forward non-trading loan relationship deficits

A non-trading loan relationship deficit arising under CTA09/S301(6) and not used in the period it arises is carried forward and available against non-trading profits (CTA09/s457; CFM32040).  The default treatment is that this relief is automatic and the maximum amount within the restriction should be set off against relevant non-trading profits (see BKM303200).

However the banking company is entitled to make a claim that non-trading loan relationship deficits brought forward at the start of an accounting period are carried forward to the next accounting period rather than being automatically offset against non-trading profits of that period.  (CTA09/S458 and CFM32040).

Carried-forward management expenses

Expenses of management of a company’s investment business are allowable as a deduction from a company’s total profits (CTA09/S1219.  This is automatic and the maximum amount within the restriction, after allowing reliefs against relevant trading profits and relevant non trading profits, should be given against total profits (see BKM303200).

Where it is not possible to give a deduction in one accounting period the expense of management is treated as an expense of management of the next accounting period (CTA09/S1223).