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HMRC internal manual

Property Income Manual

Losses for CT: losses on cessation of business

The general rule is that a UK property loss cannot be carried forward to an accounting period after the UK property income business ceases (CTA10/S62(4)(b)). However, where:

  • the loss would have been carried forward if the UK property business hadn’t ceased, and

  • the company has an investment business that continues in the next accounting period,

the loss may be carried forward to the next accounting period and deducted as a management expense under CTA09/S1219.

A claim is required before relief is allowed against the company’s total profits of the next accounting period.

From 1 April 2017, the priority rule in s1219(1A) 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 (CTA09/S63(7)).

Claims

A company must make a claim to set:

  • carried-forward UK property business losses against total profits, or

  • UK property business losses carried forward as management expenses against total profits.

The claim can be for the whole or part of the loss or expense.

The claim must be made within 2 years of the end of the period in which the company wishes to utilise the loss or such further period as HMRC allows (CTA10/S62(5A) - (5D), CTA10/S63(4) - (6)).