Use of carried forward company losses

by Readers Question

17:20 PM, 22nd April 2020
About 7 months ago

Use of carried forward company losses

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Use of carried forward company losses

Hi Mark, I have used the services of Property118 previously for tax planning advice.

I have a company that is no longer trading (but still active) that is sitting on a £20,000 of losses and I was wondering if the losses of this company could be set against any potential future gains if I was to change this company to a property rental business?

Thanks and keep up the good work!

Rafi

Response from Mark Smith, Property118 Hon Legal Counsel

This link should give further guidance.

https://www.gov.uk/guidance/carry-forward-corporation-tax-losses#restriction-on-relief-for-carried-forward-losses

Carry forward a trading loss

Your company can carry trading losses forward to deduct from profits of future accounting periods as long as the trade continues.

If your company is using a carried forward trading loss in an accounting period that ends before 1 April 2017, you can only use the relief against profits of the same trade.

Where your company is using a carried forward trading loss in an accounting period that starts on or after 1 April 2017, the situation depends on when your company made the loss in question. If your company made the loss:

  • before 1 April 2017, it can only be used against profits of the same trade
  • on or after 1 April 2017, it can normally be used against your company’s total profits

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Comments

SimonP SimonP

1:15 AM, 25th April 2020
About 7 months ago

Or perhaps you could sell the company for someone else to utilise the losses?


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