Corporation Tax Act 2010 section 188ED

Claimant company's relevant maximum for the overlapping period

Section 188ED explains how to calculate the maximum amount of group relief for carried-forward losses that a claimant company can use during the overlapping period — the period common to both the claimant's and the surrendering company's accounting periods.

• The calculation follows a three-step process: start with the company's overall loss restriction maximum for the claim period, subtract losses already used that are subject to the restriction, and then apportion the result to the overlapping period.
• Certain types of carried-forward losses that are exempt from the corporate loss restriction (such as creative industry losses, insurance shock losses, ring fence trade losses, and oil contractor losses) are excluded when calculating the deductions to subtract at Step 2.
• Where the company's qualifying profits for the claim period are lower than its deductions allowance (broadly, the £5 million annual allowance), the starting point switches from the loss restriction maximum to the company's actual qualifying profits, and all carried-forward deductions are subtracted regardless of whether they are subject to the restriction.
• Qualifying profits for this purpose are calculated as the company's relevant profits before loss relief, less any amounts excluded under the rules for determining qualifying trading and non-trading profits.