Avoid HMRC Queries: Group Relief UK with the 75% Test & CT600C Workflow
Group relief lets one UK company surrender specified losses and other amounts to another member of the same qualifying group or consortium, producing a deduction in the claimant’s taxable total profits. The claim is made by the claimant company, usually on the CT600C supplementary page, and it stands or falls on written consent from the surrendering company.
TL;DR:
Group relief claims are capped at the lower of the surrenderable loss and the group’s total profits for the period, after apportioning for overlapping or changing ownership periods.
The group eligibility depends on beneficial entitlement of at least 75% in profits and assets throughout the overlapping period, not just at year-end.
Only specific categories of losses, such as trading losses, capital allowances, or property losses, qualify for surrender, and some require prior use against the company’s own profits.
Proper documentation of ownership dates, consent notices, and calculated surrender amounts is essential to avoid queries or invalid claims.
Filing and claiming relief must adhere to strict deadlines, include correct statutory references, and often require prior agreement between group members before submission.
Table of Contents
Group and consortium eligibility: the 75% test and beneficial entitlement
Before anyone quantifies a surrender, the group condition has to be met. Under the statutory definition, a conventional group generally requires a 75% subsidiary relationship, tested through beneficial entitlement rather than simple shareholding percentages. A parent must be beneficially entitled to at least 75% of profits available for distribution and at least 75% of assets available to it on a winding up, and both tests have to be satisfied, not just one, according to HMRC’s manual on groups.
Indirect ownership chains qualify where each link in the chain meets the 75% test, so a grandparent company can form a group with a sub-subsidiary provided every intermediate holding clears the threshold.
The test that trips up most practitioners is timing. The group condition must be met at some point during the overlapping accounting period, not just at the year-end snapshot most finance teams default to checking. That distinction matters for groups that have restructured mid-year.
In practice, document:
The exact dates ownership was acquired, varied or diluted, cross-referenced against both companies’ accounting periods.
The share classes involved and whether any carry different rights to profits or assets on winding up.
Written confirmation of beneficial entitlement at a time within the overlapping period, not merely at the balance sheet date.
Surrenderable categories under CTA 2010 Part 5
Corporation Tax Act 2010, Part 5 sets out exactly what can move between group members, and the list is narrower than many assume. Qualifying categories include:
Trading losses arising in the surrendering company’s accounting period.
Excess capital allowances where allowances exceed the income of the relevant business.
Non-trading loan-relationship deficits (NTLRDs).
Qualifying charitable donations that exceed the surrendering company’s profits.
UK property-business losses.
Excess management expenses of an investment business.
Non-trading losses on intangible fixed assets.
Not every category surrenders on the same basis. Some, such as excess capital allowances and management expenses, are only available once the surrendering company has used them against its own profits for the period, so the order of set-off matters before you even reach the group-relief computation. Carried-forward losses sit under separate rules entirely, with their own streaming and ceiling conditions, covered below.
Where an accounting period straddles 1 April 2017, the surrenderable amount typically needs apportioning between the pre- and post-2017 regimes, since the carried-forward-loss reforms introduced different conditions for losses arising either side of that date. Getting this split wrong is one of the more common reasons a claim gets queried.
Calculating a surrender: the ‘lower of’ rule in practice
Quantifying a group relief claim is a three-step exercise, and HMRC’s own guidance on calculating ordinary group relief sets out the sequence plainly.
Identify the surrenderable amount for the surrendering company’s accounting period, after that company has applied any losses against its own profits where required.
Check the overlap and ownership proportion: where accounting periods do not match exactly, the surrenderable amount and the claimant’s profits are each time-apportioned to the overlapping period, and where group membership changes mid-period, the claim is scaled to the ownership proportion.
Restrict to the lower of the available surrenderable amount and the claimant’s total profits for the corresponding period, after taking account of the claimant’s own reliefs.
The claim is always capped at the smaller of the two figures, surrendering company’s available loss or claimant’s available profit, which prevents a group manufacturing relief in excess of real taxable capacity, a principle confirmed in HMRC’s internal manual.
Say, purely as an illustration, that Company A has a surrenderable trading loss for its accounting period, and Company B, a group member with a fully overlapping period, has total profits less than that loss before any group relief claim. The claim is restricted to the claimant’s total profits, leaving some of Company A’s loss to carry forward or surrender elsewhere in the group if eligible. Partial claims are permitted: Company B could instead claim £100,000 and leave headroom for a different group member to claim the remainder, provided the overall amount surrendered never exceeds what Company A can give.
Two safeguards matter here. First, the same loss cannot receive relief twice, so a loss already used elsewhere (carried back, for instance) is not available for surrender. Second, intra-group payments made under an agreement, up to the amount surrendered, are ignored for tax purposes, meaning groups can settle the commercial cost of a surrender without creating a separate taxable event.
Pitfall checklist: confirm the loss hasn’t already been relieved elsewhere, recheck the overlap period after any restructuring, and never assume last year’s apportionment percentage still applies.
Filing a group relief claim: consent notices, CT600C and deadlines
A claim is only as good as its paperwork, and HMRC is specific about what a consent notice must contain. For ordinary group relief, the notice needs the surrendering company’s name and tax reference, the claimant’s name, the amount surrendered, and the accounting period it relates to. For carried-forward losses surrendered from 1 April 2017 onwards, the notice must additionally identify the specific loss and the statutory provision under which it arose, as required under FA98/SCH18/PARA71 and confirmed in HMRC’s guidance.
The claimant reports the claim on the CT600C supplementary page attached to its Company Tax Return, with the consent notice either attached directly or, under simplified arrangements that some groups set up with HMRC, authorised by a nominated company’s counter-signature rather than individual notices for every claim. Where the surrendering company’s own return later needs to reflect a change in the amount surrendered, that return has to be amended too, since the two filings need to stay consistent.
Practical workflow:
Confirm group eligibility and the overlapping period before drafting anything.
Quantify the surrenderable amount and agree the figure with the surrendering company in writing.
Obtain and date the consent notice, referencing the correct statutory provision for carried-forward losses.
Complete CT600C and attach the consent notice, or rely on the simplified-arrangement counter-signature where one is in place.
Amend the surrendering company’s return if the agreed surrender changes after filing.
Claims can generally be made, amended or withdrawn up to the first anniversary of the claimant company’s filing date, with extensions available where HMRC has opened an enquiry into the return, as set out in the CT600C guidance.
Pro Tip: Get the consent notice signed before the claimant files, not after. A claim submitted ahead of consent invites an HMRC query that a few days of sequencing would have avoided.
Restrictions, caps and edge cases that block a claim
Carried-forward losses are not surrendered on the same open basis as in-year losses. Since 1 April 2017, only qualifying carried-forward losses can generally move between group members, and HMRC’s guidance on group relief for carried-forward losses describes a separate streaming regime with its own conditions. Where an accounting period straddles the 2017 reform date, the loss has to be apportioned between the old and new rules, usually on a time basis, before you know which conditions apply to which portion.
A further constraint is the relevant maximum, an overriding ceiling on how much carried-forward loss a company can surrender in a period, calculated by reference to the claimant’s own carried-forward losses and profits. This restriction does not apply to in-year group relief or to losses carried back from a later period, only to the carried-forward-loss regime specifically.
Watch for:
A surrendering company whose investment business has become small or negligible, which can restrict further carry-forward and surrender of management expenses.
A surrendering company holding no income-generating assets, a fact pattern HMRC scrutinises closely when the loss claimed seems disproportionate to the business’s apparent activity.
Mixed-period claims where part of the loss falls under pre-2017 rules and part under the carried-forward regime, each with different surrender conditions.
Running these checks before filing avoids a claim that technically meets the group condition but fails on a narrower statutory restriction.
A pre-filing playbook for group relief claims
Most group relief problems are documentation problems, not technical ones. Before submitting anything, work through this sequence:
Build an ownership chart showing effective dates for every change in shareholding across the group.
Prepare a loss schedule tagged by statutory provision, separating in-year losses from carried-forward amounts.
Maintain a consent tracker recording who signed what, when, and for which accounting period.
Keep a copy of the filed CT600C alongside a plan for amending the surrendering company’s return if figures change.
Archive evidence of any commercial payment made for the surrender, kept separate from the tax claim itself.
Three traps come up repeatedly. Groups edit an existing consent notice rather than withdrawing and reissuing it, which HMRC treats as invalid rather than as an amendment, per HMRC’s manual. Finance teams misdate the overlap period by relying on year-end snapshots instead of checking entitlement throughout the period. And surrendering companies forget to amend their own return once the surrendered amount changes, leaving two inconsistent filings on HMRC’s system.
Pro Tip: Treat the consent notice as a legal document, not an internal memo. A notice that is wrong in a single statutory reference can unwind an otherwise valid claim.
When to prioritise group relief in year-end planning
Group relief earns its place early in year-end planning, not as an afterthought once the numbers are final. Groups with a loss-making subsidiary and a profitable claimant reduce cash tax and HMRC enquiry risk by agreeing the surrender and consent before returns are drafted, rather than retrofitting a claim under time pressure.
That means tax, treasury and finance teams need to be in the same conversation, documenting both the commercial rationale for any intra-group payment and the tax position separately. Consortium claims and anything touching cross-border ownership chains carry enough nuance that a second opinion from a specialist adviser is worth the time before you file.
— Shoaib
How KeystoneFA supports group relief claims
We help founders and growing businesses turn group relief from a compliance headache into a planned part of year-end tax work, through our tax planning and returns service alongside CT600 and CT600C preparation, consent-notice drafting and pre-filing governance reviews.
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Whether you need a one-off review of a single claim or ongoing support as your group structure grows, we work on a project basis or as part of an ongoing accounting retainer. Get in touch through our services page to arrange a pre-filing consultation before your next return is due.
FAQ
What are the restrictions on group loss relief in the UK?
Carried-forward losses face additional restrictions, including the relevant maximum and streaming rules that do not apply to in-year losses.
How to calculate group relief?
You identify the surrenderable amount for the surrendering company’s period, adjust for any overlap or ownership proportion where accounting periods do not align, then claim the lower of that amount and the claimant’s available total profits, as set out in HMRC’s calculation guidance. Partial claims are allowed, so a group can split a single surrenderable loss across more than one claimant.
What qualifies as a group company?
A company generally qualifies as part of a group where a parent holds at least 75% of its subsidiary’s ordinary share capital and is beneficially entitled to at least 75% of distributable profits and at least 75% of assets on a winding up, per HMRC’s group relief manual. Indirect ownership through a chain of subsidiaries can also qualify, provided every link in the chain meets the same threshold, and separate consortium conditions apply where no single company holds 75%.
What will be the Corporation Tax rates in 2026?
For the financial year 2026, the main rate of Corporation Tax is 25% and the small-profits rate is 19%, with marginal relief applying to profits between £50,000 and £250,000 using the standard fraction, according to GOV.UK’s rates and allowances page. These thresholds are reduced proportionately for short accounting periods or where a company has associated companies.
How do I claim group relief on a tax return?
The claimant company reports the claim on the CT600C supplementary page of its Company Tax Return, attaching the surrendering company’s written consent notice unless a simplified arrangement with HMRC is in place, as described in GOV.UK’s CT600C guidance. Claims can usually be made, amended or withdrawn up to the first anniversary of the claimant’s filing date, with extensions possible where HMRC has opened an enquiry.
Sources
Primary legislation and HMRC pages to consult
For the exact statutory wording and the latest manual updates, go directly to the source rather than relying on a summary. The legislation sets the boundaries of what qualifies; the manuals explain how HMRC applies it in practice, including the consent and filing mechanics covered in this article.
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