Taxes Consolidation Act 1997 section 400

Company reconstructions without change of ownership

Section 400 provides that where a company ceases to carry on a trade and another company takes it over, unused capital allowances, trading losses, and certain interest limitation reliefs can transfer to the successor company, provided there is at least 75% common ownership of the trade before and after the change.

• The successor company steps into the shoes of the predecessor for capital allowances, balancing charges, and trading losses, provided at least 75% of the trade belongs to the same persons within one year before and two years after the change.
• Ownership of a trade is traced through shareholdings, partnerships, trusts, and family relationships; relatives and trust beneficiaries are treated as a single person for the 75% ownership test.
• The predecessor company cannot claim terminal loss relief, but unrelieved trading losses pass to the successor; terminal loss relief can flow back to the predecessor if the successor ceases trading within four years.
• Finance Act 2025 clarified that capital allowances and intangible asset reliefs can only transfer to the successor where the underlying assets have also transferred; where assets are split, relief must be apportioned on a just and reasonable basis.