Foreign profits ― loss relief

Produced by

Corporation Tax

Guidance

The treatment of losses of UK companies from foreign operations depends on the nature and extent of the foreign operations.

Trade carried on wholly overseas

Losses of a UK company from a trade carried on wholly overseas by that company cannot be set against any profits from other sources, including other overseas businesses. The losses can only be carried forward and set against future profits of the same trade. This rule was not relaxed by the changes in the utilisation of losses carried forward arising from 1 April 2017 which apply for UK trading losses. These amendments allow other trade losses carried forward to be offset against future profits or surrendered as group relief. For details of the rules on carried-forward trade losses from 1 April 2017, see the Trading losses carried forward and Group relief for carried-forward losses guidance notes.

The carried-forward loss relief changes also introduced a restriction such that only 50% of profits in excess

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Anne Fairpo

Barrister

With effect from 1 June 2021, Anne Fairpo is a judge of the First-tier Tribunal sitting in the Tax Chamber. She was previously a fee-paid judge in the same Chamber. Her contributions to LexisPSL Tax and TolleyGuidance were written before her full-time appointment and are her personal view as she is not authorised to write on behalf of the Tribunals Service or the judiciary. Until April 2021, Anne was a tenant at Temple Tax Chambers. She was called to the bar in 2009 after 15 years as a solicitor. Anne’s experience and expertise covers UK and international corporate tax planning and disputes, having acted for a range of clients from small owner-managed businesses to listed multinationals, as well as having advised on intellectual property taxation and UK-US cross-border tax planning, with regard to both direct and indirect tax matters

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