Corporation Tax Act 2010 section 269ZB

Restriction on deductions from trading profits

Section 269ZB restricts the amount of carried-forward trading losses that a company can deduct from its trading profits when calculating taxable total profits for an accounting period.

• Carried-forward trading losses (both pre-April 2017 losses and certain post-April 2017 losses restricted to the same trade) are subject to a cap on the amount that can be deducted in any accounting period
• The maximum deduction allowed (the "relevant maximum") is the company's chosen share of the annual £5 million deductions allowance allocated to trading profits, plus 50% of the company's relevant trading profits in excess of that allowance
• The company specifies in its tax return how much of the overall deductions allowance is allocated to trading profits, but this allocation cannot exceed the total allowance less any amounts allocated to non-trading profits and, for insurance companies, any amount allocated to BLAGAB purposes
• The restriction does not apply if the company's trading profits (before these carried-forward loss deductions) are nil or negative