Corporation Tax Group Relief: How to Share Losses Between Companies
If you own or control multiple limited companies, group relief lets you transfer losses from one company to another — reducing the profitable company's corporation tax bill. It's one of the most valuable tax planning tools for company groups.
What Is Group Relief?
Group relief allows a company that has made a trading loss to surrender that loss to another company in the same group. The receiving company can then deduct the surrendered loss from its own profits, reducing its corporation tax.
Example:
- Company A makes a £50,000 profit
- Company B makes a £30,000 loss
- Company B surrenders its loss to Company A
- Company A's taxable profit drops to £20,000
- Tax saving: up to £7,500 (at 25% rate)
Without group relief, Company A would pay tax on £50,000 while Company B's loss just carries forward — tying up a tax benefit that might not be used for years.
The 75% Group Test
For group relief to be available, the companies must be in a 75% group relationship. This means:
Direct ownership
One company directly holds 75% or more of the ordinary share capital of the other.
Indirect ownership
One company holds 75%+ of another, which holds 75%+ of a third. The effective interest must be at least 75% at every level.
Example of an indirect group:
- Parent Co owns 80% of Subsidiary A
- Subsidiary A owns 90% of Subsidiary B
- Parent Co's effective interest in Subsidiary B = 80% × 90% = 72%
- ❌ This is below 75%, so Parent Co and Subsidiary B are NOT in a group for relief purposes
- ✅ But Subsidiary A and Subsidiary B ARE in a group (90% direct)
Additional conditions
Both companies must also:
- Be UK resident (or trading in the UK through a permanent establishment)
- Have corresponding accounting periods (overlap in dates)
- The surrendering company must have a qualifying loss
What Can Be Surrendered?
Trading losses
The most common type. Current-year trading losses can be surrendered in full or in part.
Excess management expenses
If an investment company's management expenses exceed its investment income, the excess can be surrendered.
Capital allowances
Where capital allowances create or increase a trading loss, the loss (including the allowance element) can be surrendered.
Non-trading loan relationship deficits
Losses from loan relationships that aren't part of a trade (e.g., interest paid on inter-company loans) can be surrendered.
What CANNOT be surrendered
- Capital losses — these can only be offset against the same company's capital gains
- Brought-forward losses — only current-year losses qualify for group relief (except under special rules from April 2017)
- Property business losses — these are ring-fenced within the company that incurred them
How to Claim Group Relief
Step 1: Both companies agree
Group relief requires mutual consent:
- The surrendering company must make a surrender notice
- The claimant company must make a claim notice
- Both must be signed by the companies' officers
Step 2: File the CT600
The claimant company claims the group relief deduction on its CT600:
- Box 140: Total group relief claimed
- CT600C supplementary page: Details of each surrender
The surrendering company reports the loss surrendered in its own CT600.
Step 3: Time limits
Group relief must be claimed within:
- 2 years of the end of the claimant's accounting period
- The claim can be amended within the same time limit
Step 4: Matching accounting periods
If the companies' accounting periods don't align exactly, the relief is restricted to the overlapping period. Profits and losses are apportioned on a time basis.
Example:
- Company A: year-end 31 March
- Company B: year-end 31 December
- Overlapping period: 1 January to 31 March (3 months)
- Only 3/12 of Company B's loss can be surrendered to Company A
The Payment Condition
There's no requirement to make a payment for group relief, but it's common practice. The surrendering company can charge the claimant for the tax value of the loss.
Why make a payment?
- Ensures the surrendering company gets cash benefit from its loss
- Doesn't create a taxable profit for the surrendering company (as long as it doesn't exceed the tax value)
- Keeps minority shareholders happy (they see the loss monetised)
Consortium Relief
If your company is owned by a consortium (5 or fewer companies collectively holding 75%+ of the shares, with each member holding at least 5%), a different but related form of relief is available.
How consortium relief differs
- Each consortium member can claim a share of the losses proportional to its shareholding
- Maximum claim = the member's percentage × the company's available loss
- The consortium company must be a trading company or holding company
Example:
- Company X is owned 40% by A, 35% by B, 25% by C
- Company X makes a £100,000 loss
- A can claim up to £40,000 group relief
- B can claim up to £35,000
- C can claim up to £25,000
Group Relief for Carried-Forward Losses (Post April 2017)
Since April 2017, there are extended group relief rules that allow:
- Carried-forward trading losses to be surrendered (not just current-year)
- But only against the claimant's total profits (not just trading profits)
- Subject to a £5 million annual deduction allowance across the group
This is a valuable but complex area — most small groups won't hit the £5 million threshold.
Capital Gains Group Relief
Separate from loss group relief, companies in a capital gains group (also 75% ownership) can:
- Transfer assets between group companies with no capital gains tax
- The asset transfers at a deemed no-gain, no-loss amount
- This is useful for reorganisations and moving assets to the most tax-efficient entity
The degrouping charge
If a company leaves the group within 6 years of receiving an asset via capital gains group relief, a deemed disposal occurs and tax may be triggered.
Common Group Relief Mistakes
1. Failing to check the 75% test properly
Indirect ownership must be 75%+ at every level. A chain of 80% → 90% holdings looks like a group but 80% × 90% = 72%, which fails.
2. Missing the 2-year time limit
Claims must be made within 2 years of the end of the accounting period. Miss this deadline and the relief is lost permanently.
3. Not aligning accounting periods
Mismatched year-ends restrict the available relief. Consider aligning group company year-ends to maximise relief.
4. Surrendering more than available
You can't surrender more loss than the surrendering company actually has. And the claim can't exceed the claimant's taxable profits.
5. Forgetting CT600C
Group relief claims require the CT600C supplementary page. Filing a CT600 with group relief in box 140 but no CT600C will be rejected.
When Group Relief Isn't Worth It
Group relief adds complexity. For very small groups, consider:
- If losses can be carried forward and used within the same company soon, group relief may not be needed
- The administrative cost of formal surrender notices and matched CT600 filings
- Whether the group structure genuinely requires 75% ownership (many family groups have 50/50 splits, which don't qualify)
Filing Requirements Summary
| Company | What to File | Key Boxes |
|---|---|---|
| Claimant | CT600 + CT600C | Box 140 (amount claimed) |
| Surrendering | CT600 | Report loss surrendered |
| Both | Surrender/claim notices | Signed by company officers |
Frequently Asked Questions
Can a parent claim relief from a subsidiary's losses?
Yes, if the 75% ownership test is met. Relief flows both up and down the group.
What if two companies want to claim the same loss?
The surrendering company decides how to allocate its available loss. It can split the surrender between multiple claimants.
Does group relief work across borders?
Limited. UK group relief is generally only available between UK-resident companies. Cross-border group relief exists in narrow circumstances (EU case law).
Can I claim group relief and carry back the same loss?
No. The same loss can't be used twice. But you can use part for carry-back and part for group relief.
How does Taxpipe handle group relief?
When filing your CT600 with Taxpipe, you can enter group relief amounts and we generate the CT600C supplementary page automatically. We handle the calculations and validation — just £59 per return.
Filing a CT600 with group relief? Use Taxpipe — we handle CT600C, group relief calculations, and HMRC submission. £59 per filing, no subscription.