Capital Allowances Act 2001

[F1 Part 2 U.K. Giving effect to first-year tax credits

Textual Amendments

F1 Sch. A1 inserted (with effect in accordance with Sch. 25 para. 9 of the amending Act) by Finance Act 2008 (c. 9), Sch. 25 para. 5

Payment in respect of first-year tax credit U.K.

18 (1) Where a company is entitled to a first-year tax credit for a chargeable period and makes a claim for payment of the credit, HMRC must pay to the company the amount of the credit. U.K.

(2) An amount payable in respect of—

(a) a first-year tax credit, or

(b) interest on a first-year tax credit under section 826 of ICTA,

may be applied in discharging any liability of the company's to pay corporation tax.

(3) To the extent that it is so applied, HMRC's obligation under sub-paragraph (1) is discharged.

(4) Where HMRC enquires into the company's company tax return for the chargeable period, no payment in respect of a first-year tax credit for that chargeable period need be made before HMRC's enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).

(5) In those circumstances HMRC may make a payment on a provisional basis of such amount as it thinks fit.

(6) No payment need be made in respect of a first-year tax credit for a chargeable period before the company has paid to HMRC any amount that it is required to pay for payment periods (within the meaning of paragraph 17(2)) ending in that chargeable period—

(a) under the PAYE regulations, or

(b) in respect of Class 1 national insurance contributions.

Restriction on losses carried forward U.K.

19 (1) For the purposes of the relieving provisions (see paragraph 20), the company's loss from the qualifying activity for a chargeable period in which it claims a first-year tax credit is treated as reduced by the amount of the loss surrendered. U.K.

(2) For the purposes of this Schedule, the amount of the loss surrendered is—

(a) where the amount of first-year tax credit mentioned in paragraph 2(1)(a) is claimed, the whole of the surrenderable loss for that period, and

(b) where less than that amount is claimed, a corresponding proportion of the surrenderable loss for that period.

20 U.K. The relieving provisions are—

(a) where the qualifying activity is a trade [F2 , a UK furnished holiday lettings business or an EEA furnished holiday lettings business] and paragraph 21 or 22 does not apply, [F3 [F4 sections 45, 45A and 45B] of CTA 2010] (relief of trading losses against future profits),

(b) where the qualifying activity is managing the investments of a company with investment business, [F5 section 1223 of CTA 2009 (carrying expenses forward)],

(c) where the qualifying activity is [F6 an ordinary UK property business or an ordinary overseas property business] and paragraph 21 does not apply, [F7 section 62(5) of CTA 2010] (relief of [F8 UK property business losses] against future profits), and

(d) where the qualifying activity is an overseas property business and paragraph 21 does not apply, [F9 section 66 of CTA 2010] (relief of overseas property losses against future profits).

Textual Amendments

F2 Words in Sch. A1 para. 20(a) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(d)(i)

F3 Words in Sch. A1 para. 20(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(11)(a) (with Sch. 2)

F4 Words in Sch. A1 para. 20(a) substituted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 126

F5 Words in Sch. A1 para. 20(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(10)(a) (with Sch. 2 Pts. 1, 2)

F6 Words in Sch. A1 para. 20(c) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(d)(ii)

F7 Words in Sch. A1 para. 20(c) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(11)(b) (with Sch. 2)

F8 Words in Sch. A1 para. 20(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(10)(b)(ii) (with Sch. 2 Pts. 1, 2)

F9 Words in Sch. A1 para. 20(d) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(11)(c) (with Sch. 2)

21 (1) This paragraph applies if the qualifying activity is [F10 [F11 an ordinary UK] property business] or an [F12 ordinary overseas] property business, and in a chargeable period— U.K.

(a) the company's loss in carrying on that activity is a loss [F13 which, as a result of section 87(3) of FA 2012, is treated for the purposes of section 76 of that Act as a deemed BLAGAB management expense for the chargeable period],

(b) an amount falls to be carried forward to a succeeding chargeable period under [F14 section 73 of FA 2012] (carrying forward unrelieved expenses on income), and

(c) the company claims a first-year tax credit for the chargeable period.

(2) The total amount which falls to be carried forward to a succeeding chargeable period under [F15 section 73 of FA 2012] is treated as reduced by the amount of the loss surrendered.

Textual Amendments

F10 Words in Sch. A1 para. 21(1) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(11) (with Sch. 2 Pts. 1, 2)

F11 Words in Sch. A1 para. 21(1) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(e)(i)

F12 Words in Sch. A1 para. 21(1) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(e)(ii)

F13 Words in Sch. A1 para. 21(1)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(6)(a)

F14 Words in Sch. A1 para. 21(1)(b) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(6)(b)

F15 Words in Sch. A1 para. 21(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(6)(c)

22 (1) This paragraph applies where the qualifying activity is [F16 basic life assurance and general annuity business] and the profits of that business are charged to tax [F16 in accordance with the I - E rules]. U.K.

[F17 (2) For the purposes of those rules, the total amount which may—

(a) be carried forward under section 73 of FA 2012 from a chargeable period in which the company claims a first-year tax credit, and

(b) be brought into account for the next chargeable period in accordance with step 5 in section 76 of FA 2012,

is treated as reduced by the amount of the loss surrendered.]

Textual Amendments

F16 Words in Sch. A1 para. 22(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(7)(a)

F17 Sch. A1 para. 22(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(7)(b)

Payment in respect of first-year tax credit not income U.K.

23 U.K. A payment in respect of a first-year tax credit is not income of the company for any tax purposes.]