Bill Dodwell, Deloitte head of tax policy, assesses new rules on limiting use of losses hits deferred tax treatment
One of the surprise measures in the March Budget was the announcement of a new corporate loss regime. This is a tax-raising measure and is estimated to cost large business about £500m annually. At the same time, loss relief is to be made more flexible by removing some of the rules that can ‘lock’ the use of losses in individual companies within a group.
The new rules will take effect from 1 April 2017 and will limit the use of losses brought forward from earlier accounting periods to offset against profits of £5m within a group and then 50% of any excess profits. Losses arising from 1 April 2017 may be set against any type of profits and also transferred to other companies as group relief – or possibly as consortium relief.
