Answers · UK 2025/26
How does group relief work for UK corporation tax?
Group relief allows one UK company to surrender trading losses, excess capital allowances, or other reliefs to another company in the same 75% group, reducing the claimant company's taxable profit. Both companies must be UK resident (or have a UK permanent establishment). Relief is claimed in the corporation tax return and is broadly available for the same accounting period.
Full answer
Group relief is governed by Part 5 of the Corporation Tax Act 2010. It allows a "surrendering company" to transfer certain losses to a "claimant company" within the same group, reducing the claimant's corporation tax liability. 75% group definition: company A and company B are in the same group if one owns at least 75% of the ordinary share capital of the other, or a third company owns at least 75% of both. Ownership must be both direct or indirect through the chain, and the beneficial entitlement to profits and assets on winding up must also be at least 75%. Types of loss that can be surrendered: current-year trading losses (most common), excess management expenses (investment companies), non-trading loan relationship deficits, and excess capital allowances. How to claim: the surrendering company makes a formal surrender; the claimant includes the relief in its corporation tax return (CT600). Both companies must consent. There is no cash payment required (though often a payment is made between companies to compensate the surrendering company -- this is commercially agreed and does not affect the tax relief itself). Consortium relief: a separate but related regime allows relief between consortium companies (where five or fewer companies together own at least 75% of another company) on a proportional basis. Group payment arrangements: large groups can set up a group payment arrangement to pay corporation tax from a nominated company, simplifying cash management. From April 2023, the full expensing and AIA regimes mean many groups have significant capital allowance pools -- planning the allocation of losses and allowances within a group is an important area of corporate tax planning. HMRC guidance is in the Corporate Intangibles Research and Development Manual and Corporation Tax guidance at CTM80000.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.