Corporation Tax Act 2010

[F1 [F2 Routine return figure U.K.

Textual Amendments

F1 Pt. 8A inserted (with effect in accordance with Sch. 2 paras. 7, 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 2 para. 1(1)

F2 Pt. 8A Chs. 2A, 2B inserted (with effect in accordance with s. 64(7) of the amending Act) by Finance Act 2016 (c. 24), s. 64(3)

357BJ Routine return figure U.K.

(1) This section applies for the purpose of calculating the routine return figure for a relevant IP income sub-stream established at Step 2 in section 357BF(2) in determining the relevant IP profits of a trade of a company for an accounting period.

(2) The routine return figure for the sub-stream is 10% of the aggregate of any routine deductions which—

(a) have been made by the company in calculating the profits of the trade for the accounting period, and

(b) have been allocated to the sub-stream at Step 3 in section 357BF(2).

For the meaning of “routine deductions”, see sections 357BJA and 357BJB.

(3) In a case where—

(a) the company (“C”) is a member of a group,

(b) another member of the group has incurred expenses on behalf of C,

(c) had they been incurred by C, C would have made a deduction in respect of the expenses in calculating the profits of the trade for the accounting period,

(d) the deduction would have been a routine deduction, and

(e) the deduction would have been allocated to the sub-stream at Step 3 in section 357BF(2),

C is to be treated for the purposes of subsection (2) as having made such a routine deduction and as having allocated the deduction to the sub-stream.

(4) Where expenses have been incurred by any member of the group on behalf of C and any other member of the group, subsection (3) applies in relation to so much of the amount of the expenses as on a just and reasonable apportionment may properly be regarded as incurred on behalf of C.

357BJA Routine deductions U.K.

(1) For the purposes of this Part, “routine deductions” means deductions falling within any of the Heads set out in—

(a) subsection (2) (capital allowances),

(b) subsection (3) (costs of premises),

(c) subsection (4) (personnel costs),

(d) subsection (5) (plant and machinery costs),

(e) subsection (6) (professional services), and

(f) subsection (7) (miscellaneous services).

This is subject to section 357BJB (deductions that are not routine deductions).

(2) Head 1 is any allowances under CAA 2001.

(3) Head 2 is any deductions made by the company in respect of any premises occupied by the company.

(4) Head 3 is any deductions made by the company in respect of—

(a) any director or employee of the company, or

(b) any externally provided workers.

(5) Head 4 is any deductions made by the company in respect of any plant or machinery used by the company.

(6) Head 5 is any deductions made by the company in respect of any of the following services—

(a) legal services, other than IP-related services;

(b) financial services, including—

(i) insurance services, and

(ii) valuation or actuarial services;

(c) services provided in connection with the administration or management of the company's directors and employees;

(d) any other consultancy services.

(7) Head 6 is any deductions made by the company in respect of any of the following services—

(a) the supply of water, fuel or power;

(b) telecommunications services;

(c) computing services, including computer software;

(d) postal services;

(e) the transportation of any items;

(f) the collection, removal and disposal of refuse.

(8) In this section—

• “externally provided worker” has the same meaning as in Part 13 of CTA 2009 (see section 1128 of that Act),

• “IP-related services” means services provided in connection with—

  (a)

  any application for a right to which this Part applies, or

  (b)

  any proceedings relating to the enforcement of any such right,

• “premises” includes any land,

• “telecommunications service” means any service that consists in the provision of access to, and of facilities for making use of, any telecommunication system (whether or not one provided by the person providing the service), and

• “telecommunication system” means any system (including the apparatus comprised in it) which exists for the purpose of facilitating the transmission of communications by any means involving the use of electrical or electromagnetic energy.

(9) The Treasury may by regulations amend this section.

357BJB Deductions that are not routine deductions U.K.

(1) For the purposes of this Part a deduction is not a “routine deduction” if it falls within any of the Heads set out in—

(a) subsection (2) (loan relationships and derivative contracts),

(b) subsection (3) (R&D expenses),

(c) subsection (4) (capital allowances for R&D or patents),

(d) subsection (5) (R&D-related employee share acquisitions),

[F3 (da) subsection (7A) (expenditure on the production of films, television programmes and video games),]

(e) subsection (8) (television production expenditure),

(f) subsection (9) (video games development expenditure).

(2) Head 1 is any debits which are treated as expenses of the trade by virtue of—

(a) section 297 of CTA 2009 (debits in respect of loan relationships), or

(b) section 573 of CTA 2009 (debits in respect of derivative contracts).

(3) Head 2 is—

(a) the amount of any expenditure on research and development in relation to the trade—

(i) for which an additional deduction for the accounting period is obtained by the company under Part 13 of CTA 2009, or

(ii) in respect of which the company is entitled to an R&D expenditure credit for the accounting period under [F4 Chapter 1A of that Part], and

(b) where the company obtains an additional deduction as mentioned in paragraph (a)(i), the amount of that additional deduction.

(4) Head 3 is any allowances under—

(a) Part 6 of CAA 2001 (research and development allowances), or

(b) Part 8 of CAA 2001 (patent allowances).

(5) Head 4 is the appropriate proportion of any deductions allowed under Part 12 of CTA 2009 (relief for employee share acquisitions) in a case where—

(a) shares are acquired by an employee or another person because of the employee's employment by the company, and

(b) the employee is wholly or partly engaged directly and actively in relevant research and development (within the meaning of section 1042 of CTA 2009).

(6) In subsection (5) “the appropriate proportion”, in relation to a deduction allowed in respect of an employee, is the proportion of the staffing costs in respect of the employee which are attributable to relevant research and development for the purposes of Part 13 of CTA 2009 (see section 1124 of that Act).

“Staffing costs” has the same meaning as in that Part (see section 1123 of that Act).

(7) Subsections (5) and (6) of section 1124 of CTA 2009 apply for the purposes of subsection (5)(b) as they apply for the purposes of that section.

[F5 (7A) Head 4A is the amount of any expenditure in respect of which the company is entitled to an audiovisual expenditure credit or video game expenditure credit under Part 14A of CTA 2009.]

(8) Head 5 is—

(a) the amount of any qualifying expenditure on a television programme for which an additional deduction for the accounting period is obtained by the company under Part 15A of CTA 2009, and

(b) the amount of that additional deduction.

(9) Head 6 is—

(a) the amount of any qualifying expenditure on a video game for which an additional deduction for the accounting period is obtained by the company under Part 15B of CTA 2009, and

(b) the amount of that additional deduction.

(10) The Treasury may by regulations amend this section.]]

Textual Amendments

F3 S. 357BJB(1)(da) inserted (22.2.2024) by Finance Act 2024 (c. 3), Sch. 2 para. 6(3)(a)(i) (with Sch. 2 paras. 16(1), 17-25)

F4 Words in s. 357BJB(3)(a)(ii) substituted (1.4.2024 with effect in relation to accounting periods beginning on or after that date) by Finance Act 2024 (c. 3), Sch. 1 paras. 13(3)(a), 16; S.I. 2024/286, reg. 2

F5 S. 357BJB(7A) inserted (22.2.2024) by Finance Act 2024 (c. 3), Sch. 2 para. 6(3)(a)(ii) (with Sch. 2 paras. 16(1), 17-25)