Under existing legislation, restrictions are in place regarding the proportion of a banking company’s or group’s profits that can be offset by brought forward losses which arose pre-April 2015 (whether these are trading losses, non-trading loan relationship deficits or management expenses). Currently the rules restrict the relief for these losses to 50% of taxable profits.
For accounting periods beginning on or after 1 April 2016, the use of these brought forward losses will be further restricted to 25% of the Bank’s taxable profits. Any profits of a Bank with an accounting period straddling 1 April 2016 will need to be allocated on a time apportionment or just and reasonable basis.
These loss restrictions will only apply to Banks.