Group Relief: How Companies in the Same Group Share Tax Losses 2026
Group relief lets profitable UK companies absorb losses from fellow group members. Learn the 75% ownership test, how surrenders work, consortium relief and the marginal relief interaction.
What is group relief?
Group relief is a Corporation Tax mechanism that allows losses (and certain other amounts) arising in one UK company to be offset against the taxable profits of another UK company in the same group.
Without group relief, each company in a group would pay Corporation Tax on its own profits, while another group member's losses could sit unrelieved for years. Group relief prevents the group paying more tax in aggregate than if all its activities were carried on by a single company.
Group relief is governed by Part 5 of the Corporation Tax Act 2010 (CTA 2010).
The 75% group requirement
Two companies are in the same group for group relief purposes if one is a 75% subsidiary of the other, or both are 75% subsidiaries of a third company.
What "75% subsidiary" means
Company B is a 75% subsidiary of Company A if:
- Company A holds at least 75% of B's ordinary share capital (directly or indirectly).
- Company A is entitled to at least 75% of B's profits available for distribution to equity holders.
- Company A would be entitled to at least 75% of B's assets on a winding up.
All three tests must be satisfied. Share capital alone is insufficient.
Indirect ownership
Indirect ownership is calculated by multiplying the ownership percentages:
-
Company A owns 90% of Company B, which owns 90% of Company C.
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A's indirect holding in C = 90% x 90% = 81% -- exceeds 75%, so A and C are in the same group.
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Company A owns 80% of B, which owns 80% of C.
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A's indirect holding in C = 80% x 80% = 64% -- below 75%. A and C are NOT in the same group for relief purposes (though B and A, and B and C, each form groups).
The equity holder rules
"Equity holder" excludes preference shareholders and loan creditors. When calculating the profit and asset entitlement tests, only ordinary equity counts. This prevents artificial group structures using preference shares to meet the 75% test while actually holding little economic interest.
How a group relief claim works
The surrender
The surrendering company has:
- A trading loss for the period.
- Or a property business loss.
- Or qualifying charitable donations that exceed income.
- Or capital allowances in excess of profits (excess capital allowances).
The surrendering company elects to surrender some or all of these amounts to the claimant company.
The claim
The claimant company makes a claim for group relief on its Corporation Tax return (CT600). The claimed amount reduces the claimant's taxable profits for the period.
Important: the claimant uses the surrendered loss against its profits -- it does not carry the loss forward itself. Group relief is a one-way transfer for the current period.
No automatic offset
Group relief does not apply automatically. Both companies must actively make the surrender and claim -- there is no HMRC-mandated netting. The claim is made on the CT600 of the claimant company, and HMRC cross-references the surrendering company's return.
Accounting period matching
Group relief can only be claimed for the overlapping period when both companies are in the same group.
If Company A has a December year-end and Company B has a March year-end:
- A's period: 1 January 2026 to 31 December 2026.
- B's period: 1 April 2025 to 31 March 2026.
- Overlapping period: 1 April 2026 to 31 December 2026 (9 months of A's year).
For the overlapping period:
- A can only surrender losses accrued proportionally during the overlap.
- B can only claim against profits accrued during the overlap.
The proportional apportionment is applied to both the surrendered loss and the profits available, on a time basis unless the accounts show a different pattern.
Current year loss only -- the critical restriction
Group relief is limited to current year losses. A company that generated losses in a prior year and carried them forward cannot surrender those carried-forward losses to another group member.
This is a significant restriction. If Company X generated £500,000 of losses in 2023/24, those losses remain locked inside Company X. Company X can use them against its own future profits (subject to the 50% cap on profits above £5 million for large companies), but cannot surrender them to a profitable group sibling.
Only losses arising in the current or contemporaneous accounting period qualify for group relief.
Interaction with Corporation Tax rates and marginal relief
The tax value of group relief depends on the rate of tax the claimant company saves:
| Claimant company profits (before group relief) | CT rate saved |
|---|---|
| Below £50,000 (small profits rate) | 19% |
| £50,001 to £250,000 (marginal relief band) | Up to 26.5% on marginal profits |
| Above £250,000 (main rate) | 25% |
For companies in the marginal relief band, the effective marginal rate is 26.5% -- higher than the main rate of 25%. This creates a counterintuitive position where a company with £150,000 profits pays an effective marginal rate of 26.5% on the band between £50,000 and £250,000.
Taking in a group relief surrender can displace profits from the 26.5% effective marginal band, making group relief particularly valuable for companies in this range.
Example:
Company X (claimant) has profits of £180,000 before group relief. CT without group relief:
- 19% on £50,000 = £9,500.
- 26.5% on £130,000 = £34,450.
- Total: £43,950.
Company X claims £130,000 of group relief from sister Company Y. Taxable profits fall to £50,000. CT: 19% x £50,000 = £9,500. Tax saved: £34,450.
The effective rate saved is 26.5% -- higher than the 25% main rate, making group relief within the marginal band especially efficient.
Consortium relief
When no single company holds a 75% interest but a group of companies together own at least 75%, consortium relief may be available.
A consortium exists where:
- At least 75% of the "consortium company" is owned by other companies (the consortium members).
- Each member holds at least 5% of the ordinary share capital.
Consortium relief allows each consortium member to surrender or receive a proportion of losses equal to its ownership percentage in the consortium company.
Example:
Company X, Y, and Z each own 33.33% of Consortium Co Ltd. Consortium Co makes a £300,000 trading loss. Each of X, Y, and Z can claim group relief of £100,000 (33.33%) against their own profits.
Consortium relief requires specific claims and the percentages must be calculated precisely. It is typically used in joint venture structures.
Payment for group relief
There is no requirement to make a payment between group companies for a group relief surrender. However, in practice, many groups do transfer a cash amount equal to the tax value of the loss (e.g. the surrendered loss x the applicable CT rate).
HMRC specifically provides that a payment made for group relief, not exceeding the Corporation Tax value of the loss, is ignored for Corporation Tax purposes -- it is neither income of the recipient nor a deductible expense of the payer.
This symmetry allows groups to manage cashflow between entities while maintaining tax neutrality at the group level.
Practical filing requirements
- Claimant company: claim on CT600, supported by calculations showing the overlapping period and amounts.
- Surrendering company: file a notice of consent to surrender (Form CT600C or equivalent in commercial software).
- Both returns should be filed for the same period. HMRC can raise enquiries if the amounts do not reconcile.
- The time limit for group relief claims is the later of 1 year from the filing deadline of the claimant company's return and the closure of any HMRC enquiry into either company's return.
Corporation Tax Calculator
Calculate Corporation Tax for UK limited companies for 2025/26.
Corporation Tax calculatorSources
- HMRC: Corporation Tax: trading losses
- HMRC: Group relief for companies
- Legislation: Corporation Tax Act 2010, Part 5
Frequently asked questions
What is the 75% group test for group relief?
A group exists for relief purposes when one company has a beneficial ownership of at least 75% of another, measured by ordinary share capital, profits available for distribution, and assets on a winding up. Indirect ownership through intermediate companies counts -- a 90% subsidiary of a 90% subsidiary gives 81% indirect ownership, which exceeds 75%.
Can losses from previous years be surrendered via group relief?
No. Group relief only applies to current year losses. Carried-forward losses (from previous accounting periods) cannot be surrendered via group relief -- they can only be used by the company that generated them. The surrendering company must surrender losses arising in the same or overlapping accounting period as the claimant.
How does group relief interact with marginal relief for Corporation Tax?
If the claimant company has profits between £50,000 and £250,000, it pays CT at the marginal effective rate (up to 26.5% on the marginal pound). Taking in a group relief surrender reduces those profits. The tax saving is at the marginal rate applicable to the profits displaced -- which may be 26.5%, 25%, or 19% depending on the resulting profit level.
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