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Autumn Budget 2018: Corporate Capital Loss Restriction

Corporate Capital Loss Restriction

The amount of capital gains that can be relieved by carried forward capital losses will be limited to 50 percent from 1 April 2020.

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The amount of capital gains realised by companies that can be relieved by carried forward capital losses will be limited to 50 percent from 1 April 2020.  The deductions allowance of £5 million per group per year that was introduced in 2017 will also be available to cover capital gains that can be offset with carried-forward capital losses.

The measure will impact large companies or groups making substantial capital gains.  

In year capital losses, including those transferred via s171A TCGA elections, and other in-year reliefs, such as group relief, can be offset in full.  Where a s171A election to transfer gains is made in order to access the carried-forward capital losses of another company, the 50 percent restriction will apply to the amount of gains transferred.

An anti-forestalling rule effective from Budget day will prevent the artificial recognition of gains before the loss restriction comes into force via, for example, the use of bed & breakfasting arrangements or contracts with delayed completion for no commercial reason.

Accounting periods spanning 1 April 2020 will be split with the 50 percent restriction applying only to gains arising in the period from 1 April 2020.  Surplus capital losses arising in the notional period ended 31 March 2020 can be offset in full against gains arising in the notional period from 1 April 2020.

A consultation on the technicalities of implementation will run to 25 January 2019.

Contact

Iain Kerr

+44 (0)20 7311 5621

iain.kerr@kpmg.co.uk

Jignesh Gosran

i+44 (0)1293 652 138

jignesh.gosrani@kpmg.co.uk 

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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