30 SECOND TAX SPEED READ - CORPORATION TAX: NEW RESTRICTIONS FOR (CAPITAL) CORPORATE LOSSES
Under current rules certain carried forward trading losses may only be offset against 50% of company profits (after annual deductions allowance of £5M has been utilized).
New proposals will see an equivalent rule apply to carry forward capital losses, in effect meaning that only 50% of a subsequent year’s capital gain may be offset by carry forward losses (exceeding the combined £5M allowance for Income and capital.)
A consultation will run until January 2019, with rules expected to take effect on 1 April 2020.
With full capital losses still available for in-year disposals, these new rules are likely to create important deadlines for Property Lawyers seeking to close transactions before their clients’ year end. Failure to close a sale ‘in year’ could significantly impact the sellers CGT position.