Budget 2021: Corporation Tax group relief changes

In Budget 2021 the Chancellor announced changes to the corporate tax loss rules for group, some with retrospective effect.

These changes take effect for accounting periods beginning on or after 1 April 2021 unless overwise flagged. 

The changes have been made to ease the administrative burden as well as some technical changes to make legislation work as intended by:  

• Removing the requirement for a nominated company to file a group allowance statement where no carried forward losses have been used in the period.
• Extending the definition of a change of ownership.
• Allowing a company to be nominated to file a group allocation statement for periods up to the date the group ceased to exist. This will allow the group to have a deductions allowance for the period.
• Allowing carried forward losses to be surrendered via group relief by a company that has fully covered its profits.
• Amending loss restriction calculations to ensure only losses claimed are included and profits capped if the deductions allowance exceeds them (retrospective from 1 April 2017).
• Extending time limits to file an original group allowance statement in line with the enquiry window.

Useful guides on this topic

Groups: At a glance
What qualifies as a group for tax? How do you form a group? Which definition of a group applies for different types of tax? How does group relief work?

Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?

External links

HMRC: Changes to the reform of loss relief rules for Corporate Tax