RPDT20445 - The charge to RPDT: reliefs: restrictions on RPDT relief - extended example

Restriction on RPDT loss relief 바카라 사이트� extended example of where gross profits are above available allowance

See RPDT20440 for the introduction to this rule.

  • M Ltd is an RP developer that has RPD profit of 拢100m in the accounting period (factor A in FA22/S38). It has available a full annual allowance of 拢25m (factor Z in FA22/S42(3).
  • M has a 50% share in a loss-making joint venture and M바카라 사이트檚 share of that loss is 拢10m, and the appropriate election is made (factor B in FA22/S38).
  • M has carried forward losses of 拢20m to set against its profits (factor C in FA22/S38).
  • Group member N Ltd makes a loss in the same accounting period and surrenders 拢30m of that to M (factor D in FA22/S38)
  • Group member O Ltd has carried forward losses and surrenders 拢40m of that to M (factor E in FA22/S38).

Absent any restriction, M바카라 사이트檚 RPD profits are A 拢100m 바카라 사이트� B 拢10m (see note below) 바카라 사이트� C 拢20m 바카라 사이트� D 拢30m 바카라 사이트� E 拢40m = 拢nil.

FA22/S42(3) restricts the amount of carried forward losses that can be used according to the formula

(A + B 바카라 사이트� Z) / 2 바카라 사이트� D = (拢100m - 拢10m 바카라 사이트� 拢25m) / 2 바카라 사이트� 拢30m = 拢65m / 2 바카라 사이트� 拢30m = 拢2.5m

The 拢2.5m of carried forward losses that can be used are set primarily against M바카라 사이트檚 own losses, see paragraphs 9(3) and 17(3) of FA22/Sch7.

M바카라 사이트檚 RPDT profits are therefore A 拢100m 바카라 사이트� B 拢10m 바카라 사이트� C 拢2.5m 바카라 사이트� D 拢30m = 拢57.5m.

Less the allowance leaves 拢32.5m charged at 4%.

The total amount of losses available for M to carry further forward is now M바카라 사이트檚 own losses 拢20m 바카라 사이트� 拢2.5m = 拢17.5m plus losses surrendered by O of 拢40m, giving a total of 拢57.5m.

FA22/S45(5) reduces this by the amount of M바카라 사이트檚 allowance for the year of 拢25m, leaving a balance of 拢32.5m. This becomes factor C for M바카라 사이트檚 next accounting period.

*Note - shown as 바카라 사이트�- 拢10m바카라 사이트� here but in terms of the statutory formula it is adding a negative number. See meaning of 바카라 사이트淏바카라 사이트� in FA22/S38

RPDT01100 contains a general introduction to RPDT and a list of abbreviations used.