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Offset in-profit reliefs and brought forward losses against trade profits before the application of the 50 per cent restriction

If you have a
Losses – post-March 2017 utilisation
schedule (usually schedule A6), the deduction allowance is needed in return for the period and it will apply a 50% restriction to any remaining unused profits. You will need to check whether there are any in-year reliefs or brought forward losses that you wish to use against the profits because these will reduce the amount that is being restricted (possibly to nil).

Offset in-year reliefs against profits

  1. Enter these as a negative value in column C and/or D, around row 9
    In-year reliefs ("the step 2 amount")
    .
  2. You may need to enter the figure as a positive value in the
    Other
     row in this section, around row 43.

Offset losses brought forward against profits

  1. Enter the negative trading profits (up to a maximum of £5 million) in column C, either:
    • around row 13 (
      Non-group deductions allowance
      ), or
    • around row 12 (
      Group deductions allowance
      ) if the company is a group. 
  2. Enter losses brought forward again further along the same row in the relevant brought forward column to show how much of each type of loss is making up that allowance.

Result of offsetting in-year reliefs or losses brought forward

  • Remaining profits are restricted.
  • Further brought forward losses are offset around row 27
    Utilisation - other pre-April-2017 losses / post-April-2017 losses.
  • If profits are less than £5 million and there are unused profits remaining, it can appear as if the profits are restricted, altthough technically they are not because the restriction at this point is irrelevant.
  • If you want to remove the restriction, you can take the following optional steps to remove an apparent restriction after offset.

Optional steps to remove an apparent restriction after offset

  1. Press
    Shift + F10
    .
  2. Enter the daily password.
  3. Select
    Edit system Formula
    .
  4. Enter the daily password again.
  5. Select the relevant cell in Column C, usually row 15 (
    Restriction to 50% of relevant profits
    )
  6. Add
    *0
     to the end of the formula, then press
    Enter
    .

This article applies to:

  • Product: Digita Corporation Tax Advanced