Corporation Tax Act 2010 section 71

How relief works

Section 71 explains the mechanics of how share loss relief is deducted from a company's income, including the order in which deductions are made and the periods against which losses can be set.

• A company first deducts the share loss from its income for the accounting period in which the loss arose; any unrelieved balance is then carried back against income of accounting periods falling wholly or partly within the preceding 12 months.
• Where the loss is carried back, the deduction for any period is limited to the amount that could not be relieved in a later period, and specific caps apply under sections 72, 74(5) and 75.
• Carry-back deductions may only be made after all other share loss relief deductions relating to earlier losses have been applied to that period's income, and any relief under Part 7 of Schedule 15 to the Finance Act 2000 takes priority over share loss relief.
• Claiming share loss relief does not prevent the company from also claiming the unrelieved portion of the allowable loss as a capital loss under the Taxation of Chargeable Gains Act 1992.