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HMRC internal manual

International Manual

Reliefs against Controlled Foreign Companies' tax: Amount of relevant allowances qualifying for relief

ICTA88/SCH26/PARA1(1)( c)

Following FA98 there is no requirement to use relevant allowances primarily against the United Kingdom company’s own Corporation Tax profits for the accounting period concerned.

A claim to set-off relevant allowances may specify any amount up to the maximum available as the amount to be relieved. Partial claims to relief are accordingly acceptable notwithstanding that certain allowances would otherwise be available on an ‘all or nothing’ basis. Where a company has more than one relevant allowance available for relief (for example, CTA10/S37(3) losses and group relief) it may specify in its claim the amount of each which it wishes to have relieved.


A United Kingdom resident company makes a loss in its trade for the year to 31 March (when the rate of corporation tax is 30%) of £100,000. For the same period it is assessed to tax of £31,000 on the chargeable profits of £120,000 of a controlled foreign company. The United Kingdom company may specify in a claim that say £50,000 of its trade losses be relieved against this tax (leaving the remainder of the tax to be covered by, say, group relief) even though had it received a dividend of £120,000 from a controlled foreign company a claim under CTA10/S37(3) in respect of the trade losses could only have been made for the full £100,000. The reduction in tax as a result of claiming relief in respect of trade losses (£50,000) would be £15,000 (£50,000 at 30%).