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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: carry forward and group relief of excess expenses

CTA09/S1223

Carry forward of expenses

Management expenses, qualifying charitable donations and amounts brought forward as management expenses that are not relieved in full in the accounting period in which they arise are carried forward and are treated as management expenses of the next accounting period. Excess management expenses cannot be carried back.

Amounts brought forward as management expenses;

  • Must not have been claimed in full for offset (CTA10/1223 (1)(b)(i)),  For accounting periods beginning before 1 April 2017, no claim was required.
  • Are subject to loss restriction rules relating to restrictions on deductions from total profits under CTA10/S269ZD (3) see CTM05020, 
  • Are amounts restricted for banking companies under CTA10/S269CC.

The conditions for carrying forward the expenses are:

  • The expenses have not been surrendered as group relief or group relief for carried-forward losses under CTA10/PART5 and CTA10/PART5A (S1223 (3A))
  • The company must continue to carry on the investment business in the next accounting period (CTA09/S1219 (1)).

From 1 April 2017, the priority rule in S1219 (1A) [## CTA09/S1223

Carry forward of expenses

Management expenses, qualifying charitable donations and amounts brought forward as management expenses that are not relieved in full in the accounting period in which they arise are carried forward and are treated as management expenses of the next accounting period. Excess management expenses cannot be carried back.

Amounts brought forward as management expenses;

  • Must not have been claimed in full for offset (CTA10/1223 (1)(b)(i)),  For accounting periods beginning before 1 April 2017, no claim was required.
  • Are subject to loss restriction rules relating to restrictions on deductions from total profits under CTA10/S269ZD (3) see CTM05020, 
  • Are amounts restricted for banking companies under CTA10/S269CC.

The conditions for carrying forward the expenses are:

  • The expenses have not been surrendered as group relief or group relief for carried-forward losses under CTA10/PART5 and CTA10/PART5A (S1223 (3A))
  • The company must continue to carry on the investment business in the next accounting period (CTA09/S1219 (1)).

From 1 April 2017, the priority rule in S1219 (1A)](https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm08610) no longer applies in relation to management expenses carried forward so that it is not necessary to allow a deduction for carried-forward management expenses before other deductions from total profits (S1223 (3E)).

Claims

CTA10/S1223 (3B) to (3D)

A company must make a claim to set carried-forward management expenses against total profits. This can be for the whole or part of the management expenses.

The claim must be made within 2 years of the end of the period in which the company wishes to set off the management expenses 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.

Group Relief

CTA10/S99 and 103 and CTA10/S188BB (1)

Where the company is a member of a group, excess management expenses arising in the accounting period in which they were incurred can be surrendered as group relief.  

Prior to 1 April 2017, amounts brought forward from an earlier accounting period could not be group relieved.  From 1 April 2017, carried forward management expenses (excluding qualifying charitable donations) incurred on or after 1 April 2017 may be available for group relief for carried-forward losses under CTA10/S188BB see CTM82000.