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ACCA Applied Skills · Taxation (UK) · The use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Alpha Ltd and Beta Ltd are both UK resident companies. Alpha Ltd owns 80% of the ordinary share capital of Beta Ltd and has done so for several years. Both companies prepare accounts to 31 March each year. For the year ended 31 March 2026, Beta Ltd made a trading loss. Which statement about group relief is correct?

Beta Ltd can surrender its trading loss to Alpha Ltd. Group relief needs a 75% group relationship between UK resident companies, and an 80% holding satisfies this. The claimant company needs profits to relieve, not a loss, and 100% ownership is not required.

  1. ABeta Ltd can surrender its trading loss to Alpha Ltd because they are in a 75% groupCorrect
  2. BBeta Ltd can only carry the loss forward against its own future profits
  3. CBeta Ltd can only surrender the loss if Alpha Ltd owns 100% of its shares
  4. DBeta Ltd can surrender the loss to Alpha Ltd only if Alpha Ltd also made a loss

Explanation

Group relief is available between UK resident companies in a 75% group. Alpha Ltd holds 80%, so the 75% test is met, and a current period trading loss can be surrendered to a company with profits. Surrender does not require 100% ownership or a loss in the claimant.

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