Group relief for trading losses

tiemadmin • 13 March 2025

Group relief helps reduce the overall Corporation Tax of a group of companies by allowing them to share losses. For example, if a parent company has profits of £1,000 and its subsidiary has losses of £100, the group is treated as making £900 in total profits for tax purposes, instead of paying tax on the full £1,000. The group would then pay tax on the £900.

Group relief lets one company transfer its losses to another company within the same group, but it doesn’t treat the group as a single entity for tax purposes. Each company remains a separate legal entity. The surrendering company must actively consent to the claimant company utilising its losses.

Key points of group relief:

  • Losses and certain other amounts can be transferred between companies in the same group.
  • The amount that can be claimed is the lower of the surrendering company’s available losses and the claimant company’s total profits.

There are special rules that apply:

  • to UK permanent establishments of companies resident outside the UK and overseas permanent establishments of UK resident companies, if there is the possibility of relief being given in a jurisdiction other than the UK,
  • if there are arrangements that could affect the group relationship, or
  • if the loss arises to a 75% subsidiary resident in an European Economic Area territory.

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