Key takeaways
- Group relief lets a company surrender losses to other companies in the same group to reduce their Corporation Tax.
- Companies are in a group if one is a 75% subsidiary of the other, or both are 75% subsidiaries of a third company.
- Current-period trading losses, excess capital allowances, property losses, non-trading deficits and excess management expenses can be surrendered.
- Losses carried forward from April 2017 onwards can also be surrendered, subject to conditions.
- Relief is limited to the overlapping period when companies were in the group together.
Each company in a group is taxed separately, but group relief lets losses in one company reduce the taxable profits of another. For groups with a mix of profitable and loss-making companies, it can mean paying tax only on the overall profit.
The 75% group test
Two companies are in a group for group relief if:
- one is a 75% subsidiary of the other, or
- both are 75% subsidiaries of a third company
A 75% subsidiary is one in which the parent holds, directly or indirectly, at least 75% of the ordinary share capital, and is entitled to at least 75% of the distributable profits and of the assets on a winding up. Indirect holdings are multiplied through: a company that owns 90% of a subsidiary, which owns 80% of another, indirectly owns 72% of the third, which is not enough.
Individuals cannot be at the top of a group for this purpose. Two companies owned by the same person, with no holding company, are not a group for group relief, though they may be associated companies.
What can be surrendered
| Type of loss or excess | Current period | Carried forward (post-April 2017) |
|---|---|---|
| Trading losses | Yes | Yes, subject to conditions |
| Excess capital allowances | Yes | Not separately |
| Non-trading loan relationship deficits | Yes | Yes |
| UK property business losses | Yes, to the extent they exceed the surrendering company’s other profits | Yes |
| Excess management expenses of investment companies | Yes, to the extent they exceed other profits | Yes |
| Excess charitable donations | Yes, to the extent they exceed other profits | No |
| Capital losses | No (but gains and losses can be matched by transferring assets within the group) | No |
Current-period trading losses can be surrendered even if the surrendering company has other profits it could have used them against.
Overlapping periods
Relief is only available for the period when both companies were members of the group and their accounting periods overlap. If a company joins or leaves a group part-way through, profits and losses are time-apportioned unless another method is more just and reasonable.
Example
Alpha Ltd owns 100% of Beta Ltd and Gamma Ltd. For the year to 31 December 2026:
| Company | Result |
|---|---|
| Alpha Ltd | Profit £300,000 |
| Beta Ltd | Trading loss £(120,000) |
| Gamma Ltd | Profit £40,000 |
Beta can surrender its £120,000 loss to Alpha, Gamma, or split it between them. Surrendering the whole loss to Alpha, which pays tax at 25%, saves £30,000. Because the three companies share the £50,000 and £250,000 limits (about £16,667 and £83,333 each), Gamma’s profits above £16,667 sit in the marginal relief band, where the effective marginal rate is 26.5%, so surrendering about £23,333 to Gamma and the rest to Alpha saves slightly more. Groups usually surrender losses where they save the most tax.
Carried-forward losses
Since 1 April 2017, losses carried forward can be surrendered to other group members, provided the surrendering company has no capacity to use them itself in the period, and subject to the £5 million deductions allowance and 50% restriction across the group. See Corporation Tax loss relief.
Consortium relief
A company is owned by a consortium if at least 75% of its shares are held by companies, each holding at least 5%, none of which holds 75% or more. Consortium relief allows losses to pass between the consortium company and its members in proportion to their holdings.
Claiming group relief
- The surrendering company gives consent to the surrender, and the claimant company claims it on its CT600 (supplementary page CT600C).
- Claims must normally be made within two years of the end of the claimant’s accounting period.
- A group can pay for group relief: payments up to the amount of the loss surrendered are ignored for Corporation Tax.
Groups and other rules
- Group companies are associated companies, which divides the £50,000 and £250,000 limits; see associated companies.
- Assets can be transferred within a capital gains group (also 75%) at no gain, no loss.
- A group shares one £1 million Annual Investment Allowance.
Frequently asked questions
What is group relief?
A relief that lets one company in a 75% group surrender its losses to another group company to reduce that company’s taxable profits.
What ownership is needed for group relief?
At least 75% of the ordinary share capital, profits and assets, held directly or indirectly by a common parent company.
Can capital losses be group relieved?
No. Capital losses cannot be surrendered, but assets can be moved within a capital gains group so gains and losses arise in the same company.
Can two companies owned by one individual use group relief?
No. There must be a company at the top of the group. Companies owned directly by the same individual are not a group for group relief.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.