Search Legislation

Corporation Tax Act 2010

 Help about what version

What Version

 Help about advanced features

Advanced Features

Changes over time for: Cross Heading: Deductions allowance

 Help about opening options

Version Superseded: 01/04/2020

Status:

Point in time view as at 12/02/2019.

Changes to legislation:

Corporation Tax Act 2010, Cross Heading: Deductions allowance is up to date with all changes known to be in force on or before 24 January 2025. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

Close

Changes to Legislation

Changes and effects yet to be applied by the editorial team are only applicable when viewing the latest version or prospective version of legislation. They are therefore not accessible when viewing legislation as at a specific point in time. To view the ‘Changes to Legislation’ information for this provision return to the latest version view using the options provided in the ‘What Version’ box above.

[F1Deductions allowanceU.K.

Textual Amendments

F1Pt. 7ZA inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 16

269ZRDeductions allowance for company in a groupU.K.

(1)This section makes provision as to the deductions allowance of a company for an accounting period where, at any time in the period—

(a)the company is a member of a group, and

(b)one or more other companies within the charge to corporation tax are members of that group.

(2)The company's deductions allowance for the accounting period is the sum of—

(a)any amounts of group deductions allowance allocated to the company for the period in accordance with sections 269ZS to 269ZV, and

(b)the appropriate amount of non-group deductions allowance of the company for the period,

up to a limit of £5,000,000.

(3)The “appropriate amount of non-group deductions allowance” of the company, for the accounting period, is—

where—

“DNG” is the number of days in the period on which the company is not a member of a group that has another member that is a company within the charge to corporation tax, and

“DAC” is the total number of days in the period.

(4)If the accounting period is less than 12 months—

(a)the appropriate amount of non-group deductions allowance, and

(b)the limit in subsection (2),

are proportionally reduced.

269ZSGroup deductions allowance and the nominated companyU.K.

(1)This section applies where—

(a)two or more members of a group are companies within the charge to corporation tax, and

(b)all the companies within the charge to corporation tax that are members of the group together nominate (“the group allowance nomination”) one of their number (“the nominated company”) for the purposes of this Part.

(2)The “group deductions allowance” for the group is £5,000,000 for each accounting period of the nominated company throughout which the group allowance nomination has effect.

(3)If the group allowance nomination takes effect, or ceases to have effect, part of the way through an accounting period of the nominated company, the “group deductions allowance” for the group for that period is—

where—

“DN” is the number of days in the accounting period on which a group allowance nomination that nominates the nominated company in relation to the group has effect, and

“DAC” is the total number of days in the accounting period.

(4)If an accounting period of the nominated company is less than 12 months, the group deductions allowance for that period is proportionally reduced.

(5)A group allowance nomination must state the date on which it is to take effect (which may be earlier than the date the nomination is made).

(6)A group allowance nomination is of no effect unless it is signed by the appropriate person on behalf of each company that is, when the nomination is made, a member of the group and within the charge to corporation tax.

(7)A group allowance nomination ceases to have effect—

(a)immediately before the date on which a new group allowance nomination in respect of the group takes effect,

(b)upon the appropriate person in relation to a company within the charge to corporation tax that is a member of the group notifying an officer of Revenue and Customs, in writing, that the group allowance nomination is revoked, or

(c)upon the nominated company ceasing to be a company within the charge to corporation tax or ceasing to be a member of the group.

(8)The Commissioners for Her Majesty's Revenue and Customs may by regulations make further provision about a group allowance nomination or any notification under this section including, in particular, provision—

(a)about the form and manner in which a nomination or notification may be made,

(b)about how a nomination may be revoked and the form and manner of such revocation,

(c)requiring a person to notify HMRC of the making or revocation of a nomination,

(d)requiring a person to give information to HMRC in connection with the making or revocation of a nomination or the giving of a notification,

(e)imposing time limits in relation to making or revoking a nomination or giving a notification, and

(f)providing that a nomination or its revocation, or a notification, is of no effect, or ceases to have effect, if time limits or other requirements under the regulations are not met.

(9)In this Part “the appropriate person”, in relation to a company, means—

(a)the proper officer of the company, or

(b)such other person as may for the time being have the express, implied or apparent authority of the company to act on its behalf for the purposes of this Part.

(10)Subsections (3) and (4) of section 108 of TMA 1970 (responsibility of company officers: meaning of “proper officer”) apply for the purposes of subsection (9) as they apply for the purposes of that section.

269ZTGroup allowance allocation statement: submissionU.K.

(1)A company must submit a group allowance allocation statement to HMRC for each of its accounting periods in which it is the nominated company in relation to a group.

This is subject to subsections (2) and (3).

(2)If a company ceases to be the nominated company in relation to a group before it submits a group allowance allocation statement to HMRC for an accounting period—

(a)that company may not submit the statement, and

(b)the company that is for the time being the nominated company in relation to the group must do so.

(3)But if a new group allowance nomination in respect of the group takes effect on a date before it is made, that does not affect the validity of the submission of any group allowance allocation statement submitted before the date the new nomination is made.

(4)A group allowance allocation statement under this section must be received by HMRC before the first anniversary of the filing date for the company tax return for the accounting period to which the statement relates.

(5)A group allowance allocation statement under this section may be submitted at a later time if an officer of Revenue and Customs allows it.

(6)A group allowance allocation statement under this section must comply with the requirements of section 269ZV.

269ZUGroup allowance allocation statement: submission of revised statementU.K.

(1)This section applies if a group allowance allocation statement has been submitted under section 269ZT, or this section, in respect of an accounting period of a company that is, or was, a nominated company (“the nominee's accounting period”).

(2)A revised group allowance allocation statement in respect of the nominee's accounting period may be submitted to HMRC by the company that is for the time being the nominated company in relation to the group.

(3)But if a new group allowance nomination in respect of the group takes effect on a date before it is made, that does not affect the validity of the submission of any revised group allowance allocation statement submitted before the date the new nomination is made.

(4)A revised group allowance allocation statement may be submitted on or before whichever is the latest of the following dates—

(a)the first anniversary of the filing date for the company tax return for the nominee's accounting period,

(b)if notice of enquiry (within the meaning of Schedule 18 to FA 1998) is given into a relevant company tax return, 30 days after the enquiry is completed,

(c)if, after such an enquiry, an officer of Revenue and Customs amends the return under paragraph 34(2) of that Schedule, 30 days after the notice of amendment is issued,

(d)if an appeal is brought against such an amendment, 30 days after the date on which the appeal is finally determined.

(5)A revised group allowance allocation statement may be submitted at a later time if an officer of Revenue and Customs allows it.

(6)In this section “relevant company tax return” means a company tax return of a company for an accounting period for which an amount of group deductions allowance was, or could have been, allocated by a previous group allowance allocation statement in respect of the nominee's accounting period.

(7)The references in subsection (4) to an enquiry into a relevant company tax return do not include an enquiry resulting from an amendment of such a return where—

(a)the scope of the enquiry is limited as mentioned in paragraph 25(2) of Schedule 18 to FA 1998 (enquiry into amendments when time limit for enquiry into return as originally submitted is passed), and

(b)the amendment relates only to the allocation of group deductions allowance for the nominee's accounting period.

(8)A group allowance allocation statement under this section must comply with the requirements of section 269ZV.

269ZVGroup allowance allocation statement: requirements and effectsU.K.

(1)This section applies in relation to a group allowance allocation statement submitted under section 269ZT or 269ZU.

(2)The statement must be signed by the appropriate person in relation to the company giving the statement.

(3)The statement must—

(a)identify the group to which it relates,

(b)specify the accounting period, of the company that is or was the nominated company, to which the statement relates (“the nominee's accounting period”),

(c)specify the days in the nominee's accounting period on which that company was the nominated company in relation to the group or state that that company was the nominated company throughout the period,

(d)state the group deductions allowance the group has for the nominee's accounting period,

(e)list one or more of the companies that were members of the group and within the charge to corporation tax in the nominee's accounting period (“listed companies”),

(f)allocate amounts of the group deductions allowance to the listed companies, and

(g)for each amount of group deductions allowance allocated to a listed company, specify the accounting period of the listed company for which it is allocated.

(4)An amount of group deductions allowance allocated to a listed company must be allocated to that company for an accounting period that falls wholly or partly in the nominee's accounting period.

(5)The maximum amount of group deductions allowance that may be allocated, by the group allowance allocation statement, to a listed company for an accounting period of that company is—

where—

“DAP” is the number of days in the accounting period of the listed company that are—

(a)

days in the nominee's accounting period, and

(b)

days on which the company was a member of the group,

“DNAP” is the number of days in the nominee's accounting period, and

“GSA” is the group deductions allowance of the group for the nominee's accounting period.

[F2(5A)In its application in relation to a listed company that is the ultimate parent (see section 269ZZB(3)) of each other company in the group, subsection (5) has effect as if after “the group” in paragraph (b) of the definition of DAP there was inserted “and was not a member of any other group]

(6)The sum of the amounts allocated to listed companies by the group allowance allocation statement may not exceed the group deductions allowance for the nominee's accounting period.

(7)If a group allowance allocation statement is submitted that does not comply with subsection (5) or (6), the company that is, for the time being, the nominated company in relation to the group must submit a revised group allowance allocation statement that does comply with those subsections within 30 days of the date on which the group allowance allocation statement that did not comply was submitted or within such further period as an officer of Revenue and Customs allows.

(8)If a group allowance allocation statement—

(a)complies with those subsections when it is submitted, but

(b)subsequently ceases to comply with either of them,

the company that is, for the time being, the nominated company in relation to the group must submit a revised group allowance allocation statement that does comply with those subsections within 30 days of the date on which the group allowance allocation statement ceased to comply with one of those subsections or within such further period as an officer of Revenue and Customs allows.

(9)If a company fails to comply with subsection (7) or (8), an officer of Revenue and Customs may by written notice to the company amend the group allowance allocation statement as the officer thinks fit for the purpose of making it comply with subsections (5) and (6).

(10)An officer of Revenue and Customs who issues a notice under subsection (9) to a company must, at the same time, send a copy of the notice to each of the listed companies.

(11)The time limits otherwise applicable to the amendment of a company tax return do not apply to any such amendment to the extent that it is made in consequence of a group allowance allocation statement being submitted in accordance with section 269ZT or 269ZU.

(12)The Commissioners for Her Majesty's Revenue and Customs may by regulations make further provision about a group allowance allocation statement including, in particular, provision—

(a)about the form of a statement and the manner in which it is to be submitted,

(b)requiring a person to give information to HMRC in connection with a statement,

(c)as to the circumstances in which a statement that is not received by the time specified in section 269ZU(4) is to be treated as if it were so received, and

(d)as to the circumstances in which a statement that does not comply with the requirements of this section is to be treated as if it did comply.

Textual Amendments

F2S. 269ZV(5A) inserted (with effect in accordance with Sch. 10 para. 32 of the amending Act) by Finance Act 2019 (c. 1), Sch. 10 para. 12

269ZWDeductions allowance for company not in a groupU.K.

(1)This section makes provision as to the deductions allowance of a company for an accounting period where section 269ZR (deductions allowance for company in a group) does not apply.

(2)The company's deductions allowance for the accounting period is £5,000,000.

(3)If the accounting period is less than 12 months, the company's deductions allowance for the period is proportionally reduced.

269ZXIncrease of deductions allowance where provision for onerous lease reversedU.K.

(1)This section applies if—

(a)a relevant reversal credit (see section 269ZY) is brought into account in calculating a company's specified profits for an accounting period, and

(b)the amount of the company's specified profits for the accounting period is greater than nil.

(2)For the purposes of this section a company's “specified profits” for an accounting period are the sum of—

(a)the company's total profits for the accounting period, calculated with the modifications set out in section 269ZF(4), and

(b)any I-E profit of the company for the accounting period.

(3)The company's deductions allowance for the accounting period (as determined in accordance with section 269ZR or 269ZW) is to be treated (for all purposes) as increased by—

(a)the amount of the relevant reversal credit, or

(b)if lower, the amount of the specified profits.

269ZYMeaning of “relevant reversal credit”U.K.

(1)For the purposes of section 269ZX a “relevant reversal credit” is a credit, or other income, brought into account in respect of the relevant reversal (see subsections (3) and (5)) of a relevant onerous lease provision.

(2)A provision in the accounts of a company (“C”) is a “relevant onerous lease provision” if—

(a)the provision relates to a lease of land under which C is the tenant (and “L” is the landlord),

(b)the provision is required, for accountancy purposes, as a provision for an onerous lease, and

(c)the lease was entered into at arm's length.

(3)The reversal (in whole or in part) of a relevant onerous lease provision is a “relevant reversal” if—

(a)the reversal is required for accountancy purposes as a result of an arrangement (“C's arrangement”) made at arm's length under which C's obligations under the lease are varied or cancelled,

(b)subsection (4) does not apply, and

(c)at least one of conditions X, Y and Z in subsection (7) is met.

(4)This subsection applies if—

(a)C and L are connected at the time when C's arrangement is made, or

(b)the landlord who granted the lease (whether that was L or another person) and the tenant to whom it was granted (whether that was C or another person) were connected at the time when the lease was granted.

(5)The reversal (in whole or in part) of a relevant onerous lease provision is a “relevant reversal” if—

(a)the lease has been granted out of a lease (“the superior lease”),

(b)L and C are members of the same group of companies,

(c)the reversal would be a relevant reversal by virtue of subsection (3) if the condition in subsection (3)(b) (lack of connection between C and L) were met,

(d)the terms of C's arrangement substantially reflect those of an arrangement (“L's arrangement”) made at arm's length under which L's obligations under the superior lease are varied or cancelled, and

(e)subsection (6) does not apply.

(6)This subsection applies if—

(a)at the time when L's arrangement is made, the landlord under the superior lease (“S”) is connected with L or C, or

(b)the landlord who granted the superior lease (whether that is S or another person) and the tenant to whom it was granted (whether that was L or another person) were connected at the time when that lease was granted.

(7)The conditions mentioned in subsection (3)(c) are as follows.

  • Condition X is that—

    (a)

    it is reasonable to suppose that immediately before C's arrangement was made there was a material risk that at some time within the next 12 months C would be unable to pay its debts as they fell due, and

    (b)

    the sole or main purpose of C's arrangement was to avert that risk (whether directly or indirectly).

    Debts due to a person connected with C are to be regarded as not being debts for the purposes of paragraph (a).

  • Condition Y is that C is in insolvent administration.

  • Condition Z is that C's arrangement is, or is part of, a statutory insolvency arrangement.

(8)In this section “statutory insolvency arrangement” means—

(a)a voluntary arrangement that has taken effect under, or as a result of, the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/ 2405 (N.I. 19)),

(b)a compromise or arrangement that has taken effect under Part 26 of the Companies Act 2006, or

(c)an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom,

(and for the purposes of this section an arrangement which is, or is part of, a statutory insolvency arrangement is taken to be “made” when the statutory insolvency arrangement takes effect).

(9)For the purposes of this section a company in administration is in insolvent administration if—

(a)it entered administration under Schedule B1 to the Insolvency Act 1986, or Schedule B1 to the Insolvency (Northern Ireland) Order 1989, at a time when its assets were insufficient for the payment of its debts and other liabilities and the expenses of the administration, or

(a)under the law of a country or territory outside the United Kingdom circumstances corresponding to those mentioned in paragraph (a) exist.

(10)In the application of subsection (5) to Scotland, the reference to the lease having been granted out of the superior lease is to the lease being a sublease of land subject to the superior lease.

(11)Section 152 (groups of companies) applies for the purposes of this section as it applies for the purposes of Part 5.

(12)For the purposes of this section any question whether a person is connected with another is to be determined in accordance with section 1122.

269ZZCompany tax return to specify amount of deductions allowanceU.K.

(1)A company's tax return for an accounting period must specify—

(a)the amount of the company's deductions allowance for the period, and

(b)if section 269ZX (increase of deductions allowance where provision for onerous lease reversed) applies, what that amount would be without the increase provided for by subsection (3) of that section.

(2)But subsection (1) applies only if the company makes for the accounting period a deduction to which section 269ZB(2), 269ZC(2) or 269ZD(2) or section 124D(1) of FA 2012 applies.

269ZZAExcessive specifications of deductions allowanceU.K.

(1)This section applies if a company's tax return for an accounting period specifies an excessive amount as—

(a)the company's deductions allowance for the period,

(b)the company's trading profits deductions allowance for the period,

(c)the company's non-trading profits deductions allowance for the period,

(d)the company's contractor's ring fence profits deductions allowance for the period, or

(e)the company's BLAGAB trade profits deductions allowance for the period.

(2)The company must, so far as it may do so, amend the company tax return so that the amount specified is not excessive.

(3)If an officer of Revenue and Customs considers that an undue amount of relief has been given as a consequence of the amount specified being excessive, the officer may make an assessment to tax in the amount which in the officer's opinion ought to be charged.

(4)If—

(a)the amount specified became excessive in consequence of an alteration being made to the amount of group deductions allowance allocated to the company for the accounting period concerned, and

(b)the company has failed, or is unable, to amend its company tax return in accordance with subsection (2),

an assessment under subsection (3) is not out of time if it is made within 12 months of the date on which the alteration took place.

(5)The power in subsection (3) is without prejudice to the power to make a discovery assessment under paragraph 41(1) of Schedule 18 to FA 1998.

269ZZBMeaning of “group”U.K.

(1)In this Part “group” means two or more companies which together meet the following condition.

(2)The condition is that one of the companies is—

(a)the ultimate parent of each of the other companies, and

(b)is not the ultimate parent of any other company.

(3)A company (“A”) is the “ultimate parent” of another company (“B”) if—

(a)A is the parent of B, and

(b)no company is the parent of both A and B.

(4)A company (“A”) is the “parent” of another company (“B”) if—

(a)B is a 75% subsidiary of A,

(b)A is beneficially entitled to at least 75% of any profits available for distribution to equity holders of B, or

(c)A would be beneficially entitled to at least 75% of any assets of B available for distribution to its equity holders on a winding up.

(5)The following apply for the purposes of subsection (4)—

(a)Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) other than sections 169 to 182, and

(b)Chapter 3 of Part 24 (subsidiaries).

This is subject to subsections (6) and (7).

(6)In applying Chapter 3 of Part 24 for the purposes of subsection (4)—

(a)share capital of a registered society is to be treated as if it were ordinary share capital, and

(b)a company (“the shareholder”) that directly owns shares in another company is to be treated as not owning those shares if a profit on their sale would be a trading receipt of the shareholder.

(7)In applying Chapter 6 of Part 5 (other than sections 169 to 182) and Chapter 3 of Part 24 for the purposes of subsection (4), they are to be read with all modifications necessary to ensure that—

(a)they apply to a company which does not have share capital, and to holders of corresponding ordinary holdings in such a company, in a way which corresponds to the way they apply to companies with ordinary share capital and holders of ordinary shares in such companies,

(b)they apply to a company which is an unincorporated association in a way which corresponds to the way they apply to companies which are bodies corporate,

(c)they apply in relation to ownership through an entity (other than a company), or any trust or other arrangement, in a way which corresponds to the way they apply to ownership through a company, and

(d)for the purposes of achieving paragraphs (a) to (c), profits or assets are attributed to holders of corresponding ordinary holdings in unincorporated associations, entities, trusts or other arrangements in a manner which corresponds to the way profits or assets are attributed to holders of ordinary shares in a company which is a body corporate.

(8)In this section “corresponding ordinary holding” in an unincorporated association, entity, trust or other arrangement means a holding or interest which provides the holder with economic rights corresponding to those provided by a holding of ordinary shares in a body corporate]

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open The Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act without Schedules as a PDF

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Point in Time: This becomes available after navigating to view revised legislation as it stood at a certain point in time via Advanced Features > Show Timeline of Changes or via a point in time advanced search.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources