Corporation Tax Act 2010

[F1 Restrictions on obtaining certain deductions U.K.

Textual Amendments

F1 Pt. 7A inserted (with effect in accordance with Sch. 2 para. 7-9 of the amending Act) by Finance Act 2015 (c. 11), Sch. 2 para. 1

269CA Restriction on deductions for trading losses U.K.

(1) This section has effect for determining the taxable total profits of a banking company for an accounting period.

(2) Any deduction made by the company for the accounting period in respect of a pre-2015 carried-forward trading loss may not exceed [F2 25%] of the company's relevant trading profits for the accounting period.

Section 269CD contains provision for calculating a company's relevant trading profits for an accounting period (see step 5 in subsection (1) of that section).

(3) But subsection (2) does not apply where the amount given by step 1 in section 269CD(1) is not greater than nil.

(4) In this Chapter “pre-2015 carried-forward trading loss”, in relation to a company and an accounting period (“the current accounting period”), means a loss which—

(a) was made in a trade of the company in an accounting period ending before 1 April 2015, and

(b) is carried forward to the current accounting period under section 45 (carry forward of trade loss against subsequent trade profits).

(5) See also sections 269CE to 269CH (losses to which restrictions do not apply).

Textual Amendments

F2 Word in s. 269CA(2) substituted (with effect in accordance with s. 57(5) of the amending Act) by Finance Act 2016 (c. 24), s. 57(2)

269CB Restriction on deductions for non-trading deficits from loan relationships U.K.

(1) This section has effect for determining the taxable total profits of a banking company for an accounting period.

(2) Any deduction made by the company for the accounting period in respect of a pre-2015 carried-forward non-trading deficit may not exceed [F3 25%] of the company's relevant non-trading profits for the accounting period.

Section 269CD contains provision for calculating a company's relevant non-trading profits for an accounting period (see step 6 in subsection (1) of that section).

(3) But subsection (2) does not apply where the amount given by step 1 in section 269CD(1) is not greater than nil.

(4) In this Chapter “pre-2015 carried-forward non-trading deficit”, in relation to a company and an accounting period (“the current accounting period”), means a non-trading deficit—

(a) which the company had from its loan relationships under section 301(6) of CTA 2009 for an accounting period ending before 1 April 2015, and

(b) which is carried forward under section 457 of that Act (carry forward of deficits to accounting periods after deficit period) to be set off against non-trading profits of the current accounting period.

(5) In subsection (4) “non-trading profits” has the same meaning as in section 457 of CTA 2009.

(6) See also sections 269CE to 269CH (losses to which restrictions do not apply).

Textual Amendments

F3 Word in s. 269CB(2) substituted (with effect in accordance with s. 57(5) of the amending Act) by Finance Act 2016 (c. 24), s. 57(3)

269CC Restriction on deductions for management expenses etc U.K.

(1) This section has effect for determining the taxable total profits of a banking company for an accounting period.

(2) Any deduction made by the company for the accounting period in respect of pre-2015 carried-forward management expenses may not exceed the relevant maximum (see subsection (7)).

(3) But subsection (2) does not apply where the amount given by step 1 in section 269CD(1) is not greater than nil.

(4) In this Chapter “pre-2015 carried-forward management expenses”, in relation to a company and an accounting period (“the current accounting period”), means amounts falling within subsection (5) or (6).

See also sections 269CE to 269CH (losses to which restrictions do not apply).

(5) The amounts within this subsection are amounts—

(a) which fall within subsection (2) of section 1223 of CTA 2009 (carrying forward expenses of management and other amounts),

(b) which—

(i) for the purposes of Chapter 2 of Part 16 of CTA 2009 are referable to an accounting period ending before 1 April 2015, or

(ii) in the case of qualifying charitable donations, were made in such an accounting period, and

(c) which are treated by section 1223(3) of CTA 2009 as expenses of management deductible for the current accounting period.

(6) The amounts within this subsection are amounts of loss which—

(a) were made in an accounting period ending before 1 April 2015, and

(b) are treated by section 63(3) (carrying forward certain losses made by company with investment business which ceases to carry on UK property business) as expenses of management deductible for the current accounting period for the purposes of Chapter 2 of Part 16 of CTA 2009.

(7) The relevant maximum is determined as follows—

• Step 1 Calculate [F4 25%] of the company's relevant profits for the accounting period. Section 269CD contains provision for calculating a company's relevant profits for an accounting period.

• Step 2 Calculate the sum of any deductions made by the company for the accounting period which are—

  (a)

  deductions in respect of a pre-2015 carried-forward trading loss, or

  (b)

  deductions in respect of a pre-2015 carried-forward non-trading deficit.

• Step 3 The relevant maximum is the difference between the amount given by step 1 and the amount given by step 2. If the amount given by step 1 does not exceed the amount given by step 2, the relevant maximum is nil.

Textual Amendments

F4 Word in s. 269CC(7) substituted (with effect in accordance with s. 57(5) of the amending Act) by Finance Act 2016 (c. 24), s. 57(4)

269CD Relevant profits U.K.

(1) To determine a company's relevant profits for an accounting period—

• Step 1 Calculate the company's total profits for the accounting period, ignoring any pre-2015 carried-forward trading losses or pre-2015 carried-forward non-trading deficits. (If the amount given by this step is not greater than nil, no further steps are to be taken: see sections 269CA(3), 269CB(3) and 269CC(3).)

• Step 2 Divide the amount given by step 1 into profits that are profits of a trade of the company (the company's “trade profits”) and profits that are not profits of a trade of the company (the company's “non-trading profits”).

• Step 3 Calculate the proportion (“the trading proportion”) of the amount given by step 1 that consists of the company's trade profits and the proportion (“the non-trading proportion”) of that amount that consists of its non-trading profits.

• Step 4 Calculate the sum of any amounts which can be relieved against the company's total profits for the accounting period (as calculated in accordance with step 1), ignoring the amount of any excluded deductions for the accounting period (see subsection (2)).

• Step 5 Deduct the trading proportion of the amount given by step 4 from the company's trade profits for the accounting period. The amount given by this step is the company's relevant trading profits for the accounting period. If the amount given by this step is not greater than nil, the company's relevant trading profits for the accounting period are nil.

• Step 6 Deduct the non-trading proportion of the amount given by step 4 from the company's non-trading profits for the accounting period. The amount given by this step is the company's relevant non-trading profits for the accounting period. If the amount given by this step is not greater than nil, the company's relevant non-trading profits for the accounting period are nil.

• Step 7 The company's relevant profits for the accounting period are the sum of its relevant trading profits for the accounting period and its relevant non-trading profits for the accounting period.

(2) The following are “excluded deductions” in relation to an accounting period (“the current accounting period”)—

(a) a deduction made in respect of pre-2015 carried-forward management expenses;

(b) a deduction for relief under section 37 (relief for trade losses against total profits) in relation to a loss made in an accounting period after the current accounting period;

(c) a deduction for relief under section 260(3) of CAA 2001 (special leasing of plant or machinery: carry-back of excess allowances) in relation to capital allowances for an accounting period after the current accounting period;

(d) a deduction for relief under section 459 of CTA 2009 (non-trading deficits from loan relationships) in relation to a deficit for a deficit period after the current accounting period.]