Glossary · UK
What is Group Relief?
A mechanism allowing trading losses and other reliefs to be surrendered between companies in a 75% group to reduce the group's overall tax bill.
Full Definition
Group Relief allows one UK company (the "surrendering company") to transfer certain tax reliefs -- primarily trading losses, but also non-trading loan relationship deficits, excess qualifying charitable donations, and excess capital allowances -- to another UK company in the same group (the "claimant company"). To qualify, the companies must be in a 75% group: broadly, a parent must own directly or indirectly at least 75% of the ordinary share capital of each subsidiary and be entitled to at least 75% of distributable profits and assets on a winding up. Group relief is claimed in the claimant company's Corporation Tax return. The claimant company sets the surrendered losses against its own total profits of the same accounting period, reducing its Corporation Tax liability. Losses can also be surrendered to group companies in other accounting periods under the "group relief for carried-forward losses" rules (introduced from 1 April 2017), though with a cap of 50% of profits. Consortium relief allows partial relief where a company is owned 75% or more by a consortium of companies. Group relief does not apply for Income Tax purposes and does not transfer the losses permanently -- the surrendering company loses the amounts surrendered.