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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Gamma Ltd (owned 100% by Delta Ltd) has a 12-month period to 31 March 2026 with a trading loss of £80,000. Delta Ltd has taxable total profits of £300,000 before group relief in the same period. Both are UK resident and are the only companies in the group. What is the maximum group relief Delta Ltd can claim from Gamma Ltd for this period?

The maximum claim is £80,000. Group relief is limited to the lower of the loss available for surrender and the claimant company's taxable total profits. Here the loss is £80,000 and Delta Ltd's profits are £300,000, so the loss is fully relieved.

  1. A£80,000Correct
  2. B£300,000
  3. C£50,000
  4. D£0, because Gamma Ltd must first use the loss against its own future profits

Explanation

Group relief is limited to the lower of the surrendering company's available loss and the claimant's taxable total profits. The loss of £80,000 is lower than the profits of £300,000, so the full £80,000 can be claimed. There is no requirement to use the loss against future profits first.

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