ATX Corporate Tax Planning Notes: Group Relief, Degrouping and Profit Extraction

ATX corporate tax planning applies UK corporation tax rules to real business decisions: moving losses with group and consortium relief, timing disposals to avoid a degrouping charge, and choosing between salary, dividend and pension for profit extraction. This note covers those rules, with two worked examples and the traps that cost marks.

In addition, the ACCA notes hub collects every study note. The December 2026 exam takes place on Wednesday 9 December 2026. Overall, the paper lasts 3 hours 15 minutes, carries 100 marks, and needs 50 percent to pass. Furthermore, the exam covers Finance Act 2025, and ACCA gives tax rates and reliefs in the exam.

What ATX corporate tax planning actually covers

ATX corporate tax planning rewards advice that is lawful, commercial and explained: match the relief to the facts, show the numbers, and warn about the anti-avoidance rule. A correct answer with no recommendation, no risk warning and no ethics comment leaves professional skills marks behind.

For example, the June 2026 to June 2027 ATX-UK syllabus names consortium relief, degrouping charges, close companies, controlled foreign companies, permanent establishments, overseas branches, double taxation relief and the substantial shareholding exemption. In addition, ATX brings forward group relief, terminal loss relief and loans to participators as TX-UK topics. Finally, ACCA publishes no percentage weights per syllabus area.

Group relief and consortium relief in ATX corporate tax planning

Group relief lets a loss-making company surrender current-year trading losses to a profit-making company in the same group. The test requires 75 percent ownership: one company must own at least 75 percent of the other, or a third company must own at least 75 percent of both. As a result, the smaller of the loss available and the claimant profit caps the surrender.

Similarly, consortium relief works the same way where no single member reaches 75 percent: each member claims a share of the loss equal to its shareholding.

Worked example 1: group relief surrender and the 75 percent test

Parent P owns 80 percent of S and 100 percent of C. S has a trading loss of 400,000 pounds and C has taxable profit of 600,000 pounds for the same 12 month period. This example uses fictional companies.

P owns 80 percent of S, at least 75 percent, so S and C form a group relief group. The loss is 400,000 pounds and the claimant profit is 600,000 pounds, so the maximum surrender is the smaller figure, 400,000 pounds. As a result, C has taxable profit after relief of 600,000 pounds minus 400,000 pounds, or 200,000 pounds.

In contrast, if P owned only 70 percent of S, the test fails and group relief is zero. Similarly, if C had profit of only 250,000 pounds, the surrender would fall to 250,000 pounds, and S would carry forward 150,000 pounds. For example, a member owning 40 percent of a consortium company with a 300,000 pound loss claims 120,000 pounds.

Worked example 2: the degrouping charge on an early exit

Assets move inside a capital gains group on a no gain, no loss basis, but a company leaving within six years of receiving an asset faces a degrouping charge on the deferred gain.

In Year 1, company A transfers a freehold property to company B, both in the same capital gains group. The transfer is no gain, no loss at a cost of 200,000 pounds, when the market value is 500,000 pounds. Then, in Year 4, B leaves the group. This example uses fictional companies.

B leaves three years after the transfer, within six years, so the charge applies. In other words, the deferred gain is 500,000 pounds minus 200,000 pounds, or 300,000 pounds, treated as arising on B at the transfer date. However, had B stayed in the group for more than six years, no charge would arise. In addition, anti-avoidance rules apply where arrangements exist for a company to leave a group.

Loss relief and terminal loss relief

ATX brings forward loss relief as a TX-UK topic. Relieve a trading loss against total profits of the same period, carry it back, or carry it forward. Current relief gives cash back sooner, a carry back reclaims tax paid, and a carry forward needs future profits.

However, ATX adds three restrictions: profits over 5 million pounds limit carried-forward trading and capital losses; a change in ownership can restrict losses; and pre-entry losses do not offset other group companies’ profits in the same way.

In addition, terminal loss relief applies when a trade ceases: you can carry back losses from the final period against profits of earlier periods, so work through the cessation date carefully. The ACCA income tax computation note revises the basic loss relief mechanics that this paper builds on.

Close companies and loans to participators

Five or fewer participators, or its directors, control a close company, and most owner-managed companies are close companies. Also, watch for close investment holding company status.

Similarly, loans to participators sit under the same TX-UK close company scope: a tax charge can fall on the company, repaid when the loan is repaid. Therefore, compare salary, dividend and loan on full tax and cash cost, and document and repay the loan promptly. A purchase by a company of its own shares can let a retiring shareholder exit cleanly, but only if the purchase meets the conditions.

Incorporation, unincorporation and profit extraction

Examiners test incorporation and unincorporation as financial decisions. For example, moving a sole trade into a company changes who is taxed, on what, and when. Incorporation can defer tax on retained profits, but it adds compliance cost and a second layer of tax on extraction.

Salary is deductible for the company but taxed as employment income, with national insurance on both sides. Dividends come from after-tax profits and carry no national insurance, but they need distributable profits. Pension contributions are deductible for the company and tax efficient for the owner, but the cash is locked away until retirement.

Overseas aspects: controlled foreign companies, permanent establishments and double taxation relief

A controlled foreign company is a non-UK company that UK residents control, and the CFC rules can apportion its profits back to the UK parent. In other words, the question is whether the overseas company has genuine substance where it sits.

Similarly, a permanent establishment is a fixed place of business through which a non-UK company trades in the UK, and it brings the UK tax net with it. The UK taxes an overseas branch of a UK company on its branch profits, with double taxation relief for foreign tax paid. In addition, the choice between a subsidiary and a branch changes the timing of relief for overseas losses, and transfer pricing and thin capitalization rules require arm’s length terms between group companies.

Exam format, dates and pass rates

ATX-UK lasts 3 hours 15 minutes and carries 100 marks, with a pass mark of 50 percent. First, Section A is one compulsory 50-mark case study: 35 technical marks, 5 ethics marks and 10 professional skills marks. Second, Section B has two compulsory 25-mark questions, each with 20 technical marks and 5 professional skills marks. Overall, professional skills carry 20 marks: communication, analysis and evaluation, scepticism and commercial acumen.

The December 2026 session runs from Monday 7 December to Friday 11 December 2026, with ATX on Wednesday 9 December 2026. In addition, pass rates from ACCA: 53 percent in September 2026, 47 percent in June 2026, 50 percent in March 2026 and 50 percent in December 2025.

Five marks in Section A test the ethical issues in giving tax planning advice. Therefore, distinguish lawful planning from avoidance the legislation targets, and refuse advice that crosses into evasion. In short, professional scepticism, the same habit tested in the ACCA audit risk notes, means checking the facts and motive.

Exam traps in ATX corporate tax planning

1. Claiming group relief below 75 percent. For example, ownership of 70 percent gives no group relief at all.

2. Missing the six year degrouping window. In other words, leaving three years after a transfer triggers the charge; leaving after six years does not.

3. Using carried-forward losses without the restrictions. In particular, profits over 5 million pounds, a change of ownership and pre-entry losses all limit relief.

4. Treating a loan to a participator as free cash. As a result, the company faces a tax charge that only reverses when the loan is repaid.

5. Quoting syllabus weights that do not exist. In fact, ACCA publishes no percentage weights per syllabus area for ATX.

6. Using the old exam structure. For example, Section A is one 50-mark case, not 60, and Section B is two compulsory 25-mark questions.

7. Ignoring the 5 ethics marks and the 20 professional skills marks. A quarter of the paper rewards judgment, so a calculation with no recommendation leaves marks behind.

One-page revision box: ATX corporate tax planning

Topic	Core rule	Key test	Watch out for
Group relief	Surrender losses to a profit maker	75 percent ownership	Smaller of loss and profit
Consortium relief	Each member claims its share	Percentage times loss	Genuine consortium needed
Degrouping charge	Deferred gain crystallises on exit	Exit within six years	Value at transfer
Loss restrictions	Carried-forward losses face limits	Profits over 5 million pounds	Ownership change, pre-entry losses
Terminal loss relief	Final period losses carried back	TX-UK revision	Cessation date sets the window
Close companies	Five or fewer participators	Apply the definition	Close investment holding status
Loans to participators	Company faces a tax charge	Charge reverses on repayment	Undocumented loans raise questions
Substantial shareholding exemption	Disposal can be exempt	Holding and trading conditions	Do not assume it applies
Overseas aspects	CFCs, permanent establishments, branches	Genuine substance	Arm’s length pricing
Profit extraction	Compare salary, dividend and pension	Cash received after tax	Dividends need distributable profits

Finally, work through both examples, then test yourself. The ACCA notes hub has companion notes.

Sources

ACCA, Advanced Taxation, United Kingdom (ATX-UK): Syllabus and Study Guide, June 2026 to June 2027: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p6/studyguides/atx_uk_j26_j27_syllabus_and_study_guide.pdf

For pass rates, see ACCA, pass rates for ACCA qualifications: https://www.accaglobal.com/gb/en/student/exam-support-resources/pass-rates-for-acca-qualifications.html

For exam dates, see ACCA, exam timetables, December 2026 session: https://www.accaglobal.com/an/en/student/exam-entry-and-administration/exam-timetables.html