As announced in Budget 2018, with effect from 1 April 2020, companies with carried forward capital losses will be subject to a restriction on the amount of those losses they can offset against chargeable gains. Subject to a group wide £5m deductions allowance (encompassing the offset of all carried forward losses), companies will only be able to offset up to 50% of chargeable gains using carried forward capital losses.
It has been announced in Budget 2020 that companies which are in insolvent liquidation will be able to shelter capital gains with capital losses without restriction during the period of liquidation. The exemption for companies in insolvent liquidation does not extend to administrations (or any other form of corporate rescue procedure).
Companies in insolvent liquidation.
The measures are expected to take effect from commencement of the regime from 1 April 2020.
Removing the restriction for companies in liquidation is a welcome amendment to the capital loss rules and could help improve returns to creditors.