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How to Calculate and Pay Corporation Tax
Can I use losses to reduce my tax bill?
Yes – though there are restrictions and rules in place to prevent evasion.
- Trading losses can be offset against all forms of profit. They can be carried back against those made in the preceding accounting period, or forward against future profit. However, if there is a major change in the business, or a change of ownership, they cannot be carried forward.
- Capital losses can be offset against capital gains. Record all losses – they can be carried forward indefinitely. However, they cannot be offset against trading income.
- Companies within a group can use losses accrued by another company in the group. The parent company must own 75% of the shares in the other company to qualify.