The measure will effect large companies that pay Corporation Tax and have carried-forward capital losses which plan to be used to offset chargeable gains accruing on or after 1 April 2020.
Transitional arrangements will apply where an accounting period straddles the above date.
A Corporate Income Loss Restriction (CILR) for carried-forward income losses was introduced in 2017 which included an allowance that the first £5 million of profits per group could be offset with carried-forward losses before the 50% restriction is applied. The steps for computing the CILR will be amended to facilitate the capital loss restriction and enable the sharing of the £5 million deductions allowance which forms part of the CILR.
What should you do?
If you are a large company for corporation tax purposes and have carried forward capital losses, then please come and speak to us about the applicability of the new measures.
Read more on the Budget here.