BKM304850 - Bank loss restriction: calculation of carried-forward reliefs available: effect on the availability of other reliefs 바카라 사이트“ an example
The following example demonstrates the effect of the bank loss restriction calculation on the availability of group relief. The example relates to the rules in force before 1 April 2017. From 1 April 2017, the rules for calculating the restriction are different, and align with the general loss restriction at CTA10/PART7ZA (see BKM305100 바카라 사이트“ 305600). However, the underlying principle, that carried-forward losses subject to the restriction can effectively be displaced by other relief, still applies post-1 April 2017.
Amounts
B1 has the following income and reliefs in the year ended 31 March 2017:
| - Pre-2015 carried-forward trading losses | -£500 |
|---|---|
| - Trading profits for the period | £500 |
Another company in B1바카라 사이트™s group has £300 available to surrender.
B1바카라 사이트™s calculation of available total profits (CTA10/s140)
Assume that B1바카라 사이트™s accounting period fully coincides with the surrendering company바카라 사이트™s.
Under the existing rules, B1 can only claim group relief against its available total profits; that is:
- Total profits after any relief automatically given or actually claimed, and
- As reduced by any potential relief from trading losses or excess Capital Allowances of the period regardless of whether those are actually claimed.
Absent the restriction, the carried-forward trading losses would automatically be set against B1바카라 사이트™s trading profits of the period. A company like B1 but outside the restriction would hence have available total profits of £nil, so would not be able to claim any group relief.
Within the restriction, however, the amount of pre-2015 carried-forward trading losses available will depend on the banking company바카라 사이트™s relevant profits.
Calculation of relevant profits (see BKM304300)
At step 1 of CTA10/S269CD B1 will calculate the total profits without taking account of the pre-2015 carried-forward trading losses. This will be the £500 trading profits for the year. There are no non-trading profits, so steps 2 and 3 will find £500 of trading profits and a trading proportion of 100%.
At step 4 B1 can decide it intends to claim up to £500 of relief in the actual tax calculation. B1 decides it will claim the full £300 available from the other group company.
This means (following on to step 5) that B1 will have (£500 less £300) £200 of relevant trading profits. According to CTA10/S269CA(2) B1 can therefore deduct a maximum of (25 percent of £200) £50 of pre-2015 carried-forward trading losses.
Calculation of taxable total profits
B1 will calculate (under CTA10/S4(3)) that it has total profits of £500 trading profits less £50 of carried-forward trading losses: £450.
It can then claim the £300 of group relief, leaving taxable total profits (s4(2)) of £150.
Subsequent changes to the reliefs claimed
If B1 later decided to claim another £100 of group relief from another company in its group, this would require a revised calculation of relevant profits.
The result at step 5 for relevant trading profits would be (£500 less £400) £100. B1 could therefore deduct (25 percent of £100) £25 of pre-2015 carried-forward trading losses.
So the calculation of taxable total income would be: total profits of (£500 less £25) £475; less group relief of £400, leaving £75 of taxable total profits.