Restrictions on brought-forward losses
In this short but crucial lesson, you'll learn about restrictions on brought forward losses—a rule that stops businesses with negligible trades from using accumulated losses to wipe out profits across their entire operation.
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In this lesson
- 0:00 Restriction on brought forward losses
- 0:08 When trade becomes small or negligible
- 0:30 HMRC's policy on loss-making businesses
- 0:54 Using losses against future profits
- 1:26 Annual allowance restriction on relief
About this lesson
HMRC's key restriction is simple: if a trade becomes small or negligible, losses can only be offset against future profits from that same trade, not against other business profits. You'll also discover the loss relief cap that applies to all businesses: a maximum of £5 million plus 50% of profits above £5 million, which equally applies to group relief situations. This is essential knowledge for the Taxation paper, where loss restriction rules frequently appear in exam questions and real-world scenarios.
Duration: 2m
Transcript
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