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HMRC internal manual

Company Taxation Manual

Corporation Tax: trading losses - relief against total profits: restrictions for farming companies


CTA10/S48 restricts loss relief of companies carrying on farming and market gardening trades in the UK or abroad. It excludes any loss incurred in carrying on such a trade from CTA10/S37 (CTM04505) if a loss was incurred in carrying on that trade:

  • in the accounting period,
  • and in each of the chargeable periods which falls wholly or partly in the five years prior to the accounting period.

For this purpose the loss is without regard to capital allowances and balancing charges. (This applies in spite of CAA01/S247, CAA01/S391 etc., which provide that normally capital allowances are treated as trading expenses.) ‘Chargeable period’ means any accounting period, or any basis period ending before the company’s first accounting period. The meaning of ‘basis period’ is in CAA01/S6.

However there are certain exceptions to this restriction of loss relief. See CTM04720 and CTM04730.

Other guidance

Where a company claims exemption from CTA10/S48 under subsection (3) the guidance at BIM85620 to BIM85645 applies, substituting ‘accounting period’ for ‘year of assessment’.