Advanced Taxation (UK) · Corporation tax: the effect of a group structure

Group Loss Relief and Consortium Relief in ATX

Updated 11 October 2026 · Fact-checked

Group relief lets a company in a 75% group surrender a current-period loss to another group company. Overlapping periods are time-apportioned, and relief is the lower of the loss and profits available. Consortium relief works similarly, but the member's percentage caps the consortium company's loss it claims, or the consortium company's profits it can use.

Understand Group Loss Relief and Consortium Relief

Corporation tax is charged on each company separately. A loss in one company does not automatically reduce the profits of another. Group relief is the exception. It lets companies in a group move a current-period loss to a company that has profits, so the group pays less tax overall.

Two companies are in a 75% group relationship when one is a 75% subsidiary of the other, or both are 75% subsidiaries of a third company. The test looks at ordinary share capital, entitlement to profits and entitlement to assets on a winding up. Indirect holdings must be worked through the chain. The companies must be in the group for the whole of the overlap period. The group can include a non-UK parent, but only losses that fall within UK corporation tax can be surrendered.

The surrendering company gives up a loss. The claimant company deducts it from its taxable total profits. Items that can be surrendered include current-period trading losses, UK property business losses, non-trading loan relationship deficits, and some other amounts such as excess management expenses and qualifying charitable donations. The claimant cannot use group relief to create a loss of its own. The amount relieved is therefore the lower of the loss available and the claimant's profits available.

If the two companies' accounting periods do not match, only the overlap counts. Apportion both the loss and the profits by months to the overlap. Group relief is a claim and consent exercise. The surrendering company must agree, and the claimant company makes the claim. A payment for the relief that does not exceed the loss surrendered is ignored for tax.

Consortium relief applies where a company is owned by a consortium of companies. Broadly, the company must be a trading company (or a holding company with trading subsidiaries) that is not a 75% subsidiary of any company, and at least 75% of its ordinary share capital must be owned by companies, each holding at least 5%. A member claiming the consortium company's loss is limited to its percentage of that loss. A member's own loss surrendered to the consortium company is limited to the consortium company's profits multiplied by the member's percentage. Where a company is both a group member and a consortium member (a link company), extra restrictions apply, so check the facts carefully. Overseas losses are limited: a non-UK resident company's losses are generally only usable where they arise from a trade carried on through a UK permanent establishment.

Key rules to remember

75% group test: Holds ≥ 75% of ordinary share capital, profits entitlement and assets on winding up (directly or indirectly); Work through the chain for indirect holdings. A parent with 80% of B, and B with 80% of C, holds only 64% of C and is not in a 75% group with it.
Group relief limit: Relief = lower of (loss available for surrender) and (claimant's profits available); The claimant cannot create or increase a loss. The surrendering company need not surrender the whole loss.
Time apportionment (non-coterminous periods): Overlap loss = loss × overlap months ÷ months in loss period; overlap profit = profit × overlap months ÷ months in claimant period; Apportion to the nearest month, as the exam supplementary instructions state. Relief is the lower of the two overlap figures.
Consortium relief limit (claim by member): Relief = lowest of (consortium company's loss available × member's %), and (member's profits available); The percentage applies to the consortium company's loss. That loss is also reduced by any other relief claimed against it. Where periods differ, time-apportion first.
Consortium relief limit (member's loss surrendered to the consortium company): Relief = lowest of (member's loss available), and (consortium company's profits available × member's %); The percentage applies to the consortium company's profits, not to the member's own loss. Where periods differ, time-apportion first.
Consortium condition: Company owned ≥ 75% by companies, each holding ≥ 5% of ordinary share capital; The company must be a trading company, or a holding company with trading subsidiaries, and must not be a 75% subsidiary of any company. A link company that is in both a group and a consortium faces extra restrictions.
Corporation tax rates for the exam (FY2025): Small profits rate 19%; main rate 25%; lower limit £50,000; upper limit £250,000; marginal relief = (upper limit – augmented profits) × 3/200 × taxable total profits ÷ augmented profits; Limits are divided by (1 + number of associated companies). Group relief reduces taxable total profits, so check where the claimant's profits sit before and after the claim.

How to solve Group Loss Relief and Consortium Relief questions

Use this order for any group relief or consortium relief requirement. Write each step in your answer so the marker can award method marks.

1Draw the structure and work out the percentage holdings, including indirect holdings. State which companies are in a 75% group, and which are consortium members.
2List each company's accounting period and result. Find the overlap period between each surrendering and claimant company, and apportion to the nearest month.
3Compute the loss available for surrender and the claimant's profits available for the overlap. Use the figures after the claimant's own current-period reliefs.
4Set relief as the lower of the two figures. For a consortium, also cap it at the member's percentage share of the consortium company's loss.
5Decide who should claim. Aim to relieve profits taxed at the highest effective rate first. Check the associated company limits and marginal relief band, using the figures in the tax tables.
6Calculate the tax saved or the revised corporation tax. Show unrelieved loss and say what happens to it, such as carry forward.
7Add the commercial point: payment for group relief, timing of the claim, restriction for overseas losses, and any anti-avoidance concern.

Quickest way: Overlap, lower-of, then rate

When to use it: Use this when the question gives you several companies, different year ends and a request for the best claim or the tax saving.

Write a small table: company, period, loss or profit, months in overlap.
Apportion loss and profit to the overlap in one line each.
Circle the lower figure for each pairing. That is the maximum claim.
Allocate the loss to the claimant paying the highest rate first. A company already at 25% is the safe default.
Multiply the relief by the rate to get the tax saved. If the claimant crosses into the marginal relief band, recalculate the full tax.

Common mistakes in Group Loss Relief and Consortium Relief

Treating the group as a 75% group when the indirect holding is under 75%.
Students look at each link and forget that percentages multiply along the chain.
Fix: Multiply through the chain, and also check profit and asset entitlement, not just shares.
Ignoring non-coterminous periods and using the full-year loss and profit.
Students rush into the numbers without comparing the year ends.
Fix: Write down both periods first. Apportion loss and profit to the overlap, and use the lower figure.
Surrendering more loss than the claimant's profits.
Students forget that group relief cannot create a loss in the claimant.
Fix: Cap the claim at the claimant's profits available. Carry the unrelieved loss forward in the surrendering company.
Applying the full consortium loss to one member instead of limiting to its percentage.
Students copy group relief logic, where percentage ownership beyond 75% does not matter.
Fix: Multiply the consortium company's loss by the member's percentage, then compare with the member's profits.
Surrendering the losses of an overseas subsidiary to a UK company without checking UK taxation.
Students assume any group company's loss is available.
Fix: State that only losses within UK corporation tax can be surrendered. A non-UK resident company's loss generally qualifies only if it arises from a trade carried on through a UK permanent establishment.
Choosing the claimant without checking the marginal relief band.
Students assume every claimant saves tax at 25%.
Fix: Divide the limits by (1 + associated companies). Check where profits fall before and after the claim, using the rates given in the tax tables.

Worked examples

Example 1

P Ltd has a trading loss of £240,000 for the year ended 31 March 2026. S Ltd is a 100% subsidiary of P Ltd throughout. S Ltd has taxable total profits of £150,000 for the year ended 31 December 2025, before any group relief. Calculate the maximum group relief that S Ltd can claim and the loss left in P Ltd.

Show the solution

The companies are in a 75% group, as S Ltd is a 100% subsidiary throughout.
The overlap is 1 April 2025 to 31 December 2025, which is 9 months.
P Ltd loss for the overlap: £240,000 × 9 ÷ 12 = £180,000.
S Ltd profit for the overlap: £150,000 × 9 ÷ 12 = £112,500.
Maximum relief is the lower of £180,000 and £112,500, which is £112,500.
Loss left in P Ltd: £240,000 – £112,500 = £127,500. It can be used for other claims or carried forward.

Answer: Maximum group relief is £112,500. P Ltd keeps an unrelieved loss of £127,500.

Example 2

X Ltd, Y Ltd and Z Ltd, unconnected companies, own 40%, 35% and 25% respectively of the ordinary share capital of C Ltd, a trading company. C Ltd is not a 75% subsidiary of any company. C Ltd has a trading loss of £100,000 for the year ended 31 March 2026. X Ltd has taxable total profits of £90,000 and Y Ltd has £20,000, both for the same period. Calculate the maximum consortium relief for X Ltd and Y Ltd.

Show the solution

Each member holds at least 5%, and together they hold 100%, so the consortium conditions are met.
X Ltd share of the loss: £100,000 × 40% = £40,000. X Ltd profits are £90,000. Relief is the lower, £40,000.
Y Ltd share of the loss: £100,000 × 35% = £35,000. Y Ltd profits are £20,000. Relief is the lower, £20,000.
Total relief is £40,000 + £20,000 = £60,000.
Z Ltd's facts are not given, so its 25% share (£25,000) is simply not claimed in this calculation. Y Ltd's unused £15,000 of its share is not transferable to other members.
Unrelieved loss in C Ltd: £100,000 – £60,000 = £40,000. C Ltd carries this forward.
Tax saving for X Ltd, assuming no associated companies and no dividend income: tax before relief is £90,000 × 25% = £22,500 less marginal relief of (£250,000 – £90,000) × 3/200 = £2,400, which is £20,100. After relief, profits are £50,000 and tax is £50,000 × 19% = £9,500. The saving is £20,100 – £9,500 = £10,600.

Answer: X Ltd can claim £40,000 and Y Ltd £20,000, total £60,000. C Ltd carries forward £40,000 unrelieved. On the stated assumptions, X Ltd saves £10,600 of tax.

Exam tips

Draw the group structure first. Marks are available for the percentages and the correct conclusion on who is grouped.
When year ends differ, show the months of overlap explicitly. Markers look for the apportionment.
Say which claimant gives the best result and why, using the tax rates given in the exam. This earns professional skills marks for commercial awareness.
For overseas losses, state the restriction in plain words, then apply it to the scenario and conclude clearly.
Where the requirement asks for advice, add the next step: claim consent, unrelieved losses, and the effect on the associated company limits.

Practice questions from Corporation tax: the effect of a group structure

Group Loss Relief and Consortium Relief in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Applied SkillsGroup Relief and Corporation Tax Groups

Group Loss Relief and Consortium Relief: frequently asked questions

What percentage is needed for group loss relief in ATX?

You need a 75% group relationship. One company must be a 75% subsidiary of the other, or both must be 75% subsidiaries of a third company. The test covers ordinary shares, profit entitlement and assets on a winding up.

How do I calculate the group relief restriction when year ends differ?

Find the overlap period and apportion the loss and the profits to it, to the nearest month. The relief is the lower of the two apportioned figures. Any remaining loss stays with the surrendering company.

How does consortium relief differ from group relief?

Consortium relief applies where at least 75% of a trading company is owned by companies that each hold at least 5%. Each member can claim only its percentage share of the consortium company's loss. In group relief, the percentage above 75% does not limit the claim.

Can losses of an overseas group company be used in group relief?

Generally only losses that fall within UK corporation tax can be surrendered. A non-UK resident company's loss usually qualifies only if it arises from a trade carried on through a UK permanent establishment. Always check the scenario facts.