Corporation Tax Act 2009

Reliefs U.K.

1044 Additional deduction in calculating profits of trade U.K.

(1) A company is entitled to corporation tax relief for an accounting period if it meets each of conditions A to D.

(2) Condition A is that the company is a small or medium-sized enterprise in the period.

F1 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Condition C is that the company carries on a trade in the period.

(5) Condition D is that the company has qualifying Chapter 2 expenditure which is allowable as a deduction in calculating for corporation tax purposes the profits of the trade for the period.

(6) For the company to obtain the relief it must make a claim.

See section 1046 (which prevents a company from making a claim if it is not a going concern).

(7) The relief is an additional deduction in calculating the profits of the trade for the period.

(8) The amount of the additional deduction is [F2 86%] of the qualifying Chapter 2 expenditure.

(9) This section is subject to —

[F3 (a) section 1045A (requirement to make a claim notification);]

[F3 (b)] section 1113 (cap on R&D aid in relation to a particular research and development project).

(10) For the meaning of “qualifying Chapter 2 expenditure” see section 1051.

Textual Amendments

F1 S. 1044(3) omitted (with effect in accordance with Sch. 3 para. 39 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 3(3)

F2 Word in s. 1044(8) substituted (in relation to expenditure incurred on or after 1.4.2023) by Finance Act 2023 (c. 1), s. 4(3)(a)(4)

F3 S. 1044(9)(a) inserted and words renumbered as s. 1044(9)(b) (with effect in relation to accounting periods beginning on or after 1.4.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 1 paras. 2(2), 20

1045 Alternative treatment for pre-trading expenditure: deemed trading loss U.K.

(1) A company is entitled to corporation tax relief for an accounting period if it meets conditions AF4 ... and C.

(2) Condition A is that the company is a small or medium-sized enterprise in the period.

F5 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Condition C is that the company has incurred qualifying Chapter 2 expenditure in the period which—

(a) is not allowable as a deduction in calculating for corporation tax purposes the profits of a trade carried on by it at the time the expenditure was incurred, but

(b) would have been so allowable had it, at that time, been carrying on a trade consisting of the activities in respect of which the expenditure was incurred.

(5) For the company to obtain the relief it must make an election.

See section 1046 (which prevents a company from making an election if it is not a going concern).

(6) The relief is that the company is treated as if it had made a trading loss in the period.

(7) The trading loss is equal to [F6 186%] of the qualifying Chapter 2 expenditure.

(8) If a company makes an election under this section in respect of qualifying Chapter 2 expenditure, section 61 (pre-trading expenses) does not apply to the expenditure.

(9) This section is subject to section 1113 (cap on R&D aid in relation to a particular research and development project).

(10) For the meaning of “qualifying Chapter 2 expenditure” see section 1051.

(11) See also section 1137, which makes provision about the accounting periods of a company which is not within the charge to corporation tax.

Textual Amendments

F4 Word in s. 1045(1) omitted (with effect in accordance with Sch. 3 para. 39 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 3(4)(a)

F5 S. 1045(3) omitted (with effect in accordance with Sch. 3 para. 39 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 3(4)(b)

F6 Word in s. 1045(7) substituted (in relation to expenditure incurred on or after 1.4.2023) by Finance Act 2023 (c. 1), s. 4(3)(b)(4)