Losses for single companies Flashcards
Trading losses can be relieved against
Current period and carry back against total profits
Carry forward against total profits
Relief is claimed against
Total profits before QCD’s
Current year profits first.
Losses incurred in the final 12 months of trading
can be offset against the previous 36 months on a last in first out basis.
When is the deadline for carrying back losses?
2 years from the end of the end of the loss making period
Carried forward trading losses can be
restricted to use QCD’s or to save tax at the highest rates.
What is the deadline for claiming carried forward losses?
2 years after the end of the accounting period in which it is relieved
Deduction allowance
5 million is the max carried forwards losses that can be offset which included trading and capital losses PLUS 50% of the remaining losses.
A group of compaies is only entitled to one deduction allowance.
If a companies trade becomes small or negliegible in an accounting period that a loss arises or a loss is carried forwards
Trading losses will automatically be offset against profits of the same trade rather than total profits
All profits on properties are
pooled
A property loss can be offsett against
CY total profits to the full extent
Total profts of other group companies through group relief
Any property loss not utilised is carried forwards and then again a claim can be made to offset some or all to preserve QCD’s and maximise tax savings.
Property losses CANNOT be carried back
Capital losses
Automatically offset against first available gains to fullest extent. Cannot be used against any other form of income and cannot be carried back.
Change fo ownership
Loss relief for trading losses may be restricted where there is a change in ownership of a company and either:
There is a major change in the nature or conduct of the trade within any 5 year period that begins on date of change of ownership and 3 years before (so 8 years total)
OR
Revival of activities which at the time had been small or negligible.
If the restriction applies:
Any losses before change in ownership cannot be carried forwards against post aq profits
AND
Any losse sincurred after the change in ownership cannot be carried back against profits arising before the change in ownership
Examples of a major change in the nature or conduct of the trade include
Nature of goods or services provided
Changes in customer base
Changes in outlets or markets
