Corporation Tax Act 2010 section 45

Carry forward of pre-1 April 2017 trade loss against subsequent trade profits

Section 45 deals with the carry forward of trade losses arising in accounting periods beginning before 1 April 2017 and their relief against future profits of the same trade.

• Trade losses from accounting periods beginning before 1 April 2017 that have not been relieved under the sideways or group relief rules (sections 37 or 42) can be carried forward against future profits of the same trade.
• The unrelieved loss automatically reduces future trade profits on a sequential basis, absorbing the earliest available profits first, for as long as the company continues to carry on the trade.
• For accounting periods beginning on or after 1 April 2017, the company may elect to restrict or disapply the loss relief, either entirely or up to a specified amount, giving flexibility over how much loss is used in a given period.
• Any such election must be made within two years of the end of the accounting period concerned, unless HMRC allows an extension, and the relief may be further restricted or modified by other provisions of the Corporation Tax Acts.