Taxation (International and Other Provisions) Act 2010

[F1 CHAPTER 6 U.K. Tax-EBITDA

Textual Amendments

F1 Pt. 10: the existing Pt. 10 renumbered as Pt. 11 (except for ss. 375, 376 which are repealed), the existing ss. 372-374, 377-382 renumbered as ss. 499-507 and a new Pt. 10 (ss. 372-498) inserted (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1, 10(1)(2)(a)(3) (with Sch. 5 paras. 27, 32-34)

405 The aggregate tax-EBITDA of a worldwide group U.K.

For the purposes of this Part “the aggregate tax-EBITDA” of a worldwide group for a period of account of the group is—

(a) the total of the tax-EBITDAs for the period of each company that was a member of the group at any time during the period, or

(b) where the amount specified in paragraph (a) is negative, nil.

406 The tax-EBITDA of a company U.K.

(1) For the purposes of this Part the “tax-EBITDA” of a company for a period of account of the worldwide group is—

(a) where the company has only one relevant accounting period, the company's adjusted corporation tax earnings for that accounting period;

(b) where the company has more than one relevant accounting period, the total of the company's adjusted corporation tax earnings for each of those accounting periods.

(2) The company's “adjusted corporation tax earnings” for an accounting period is the total (which may be negative) of the amounts that meet condition A or B.

(3) Condition A is that the amount—

(a) is brought into account by the company in determining its taxable total profits of the period (within the meaning given by section 4(2) of CTA 2010), and

(b) is not an excluded amount for the purposes of this condition (see section 407).

(4) Condition B is that the amount—

(a) is not brought into account as mentioned in subsection (3)(a), but would have been so brought into account if the company had made profits, or more profits, of any description in the period, and

(b) is not an excluded amount for the purposes of this condition (see section 407).

(5) Subsection (7) applies if an amount—

(a) is brought into account as mentioned in subsection (3)(a), or

(b) is not brought into account as mentioned in subsection (4)(a),

in an accounting period which contains one or more disregarded periods.

(6) A “disregarded period” is any period falling within the accounting period—

(a) which does not fall within the period of account of the worldwide group, or

(b) throughout which the company is not a member of the group.

(7) Where this subsection applies, the amount mentioned in subsection (5) is reduced, for the purposes of subsection (2), by such amount (if any) as is referable, on a just and reasonable basis, to the disregarded period or periods mentioned in subsection (5).

(8) An amount may be reduced to nil under subsection (7).

407 Amounts not brought into account in determining a company's tax-EBITDA U.K.

(1) An amount is an excluded amount for the purposes of conditions A and B in section 406 if it is any of the following—

(a) a tax-interest expense amount or a tax-interest income amount [F2 (or an amount which would, apart from section 388, be a tax-interest income amount);]

(b) an allowance or charge under CAA 2001;

(c) an excluded relevant intangibles debit or an excluded relevant intangibles credit (see section 408);

(d) a loss that—

(i) is made by the company in an accounting period other than that mentioned in section 406(2), and

(ii) is not an allowable loss for the purposes of TCGA 1992;

(e) a deficit from the company's loan relationships for an accounting period other than that mentioned in section 406(2);

(f) expenses of management of the company that are referable to an accounting period other than that mentioned in section 406(2);

(g) a deduction under section 137 of CTA 2010 (group relief) or section 188CK of that Act (group relief for carried-forward losses) if and to the extent that it constitutes a loss of the worldwide group;

[F3 (ga) a reduction under paragraph 37(3)(b) of Schedule 5 to FA 2019 (non-UK resident companies carrying on UK property businesses etc: unrelieved amounts);]

(h) a qualifying tax relief.

(2) For the purposes of subsection (1)(g) the deduction constitutes a “loss of the worldwide group” if and to the extent that it comprises surrenderable amounts that are referable to times at which the surrendering company was a member of the worldwide group.

(3) An amount is a qualifying tax relief for the purposes of subsection (1)(h) if it is any of the following—

(a) an R&D expenditure credit [F4 under Chapter 1A of Part 13] of CTA 2009;

(b) a deduction under section 1044, 1063, 1068 or 1087 of CTA 2009 (additional relief for expenditure on research and development);

(c) an amount which is treated as a trading loss as a result of section 1092 of CTA 2009 (SMEs: deemed trading loss for pre-trading expenditure);

(d) a deduction under section 1147 or 1149 of CTA 2009 (relief for expenditure on contaminated or derelict land);

(e) a deduction under section 1199 of CTA 2009 (film tax relief);

(f) a deduction under section 1216CF of CTA 2009 (television tax relief);

(g) a deduction under section 1217CF of CTA 2009 (video games tax relief);

(h) a deduction under section 1217H of CTA 2009 (relief in relation to theatrical productions);

(i) a deduction under section 1217RD of CTA 2009 (orchestra tax relief);

(j) a deduction under section 1218ZCE of CTA 2009 (museums and galleries exhibition tax relief);

(k) a qualifying charitable donation (whether made in the accounting period mentioned in section 406(2) or an earlier one);

(l) a deduction under section 357A of CTA 2010 (profits from patents etc chargeable at lower rate of corporation tax).

(4) An amount is an excluded amount for the purposes of condition B in section 406 if it is an allowable loss for the purposes of TCGA 1992.

Textual Amendments

F2 Words in s. 407(1)(a) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 5(2)

F3 S. 407(1)(ga) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 5(3)

F4 Words in s. 407(3)(a) substituted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 14(4)(a), 16; S.I. 2024/286, reg. 2

408 Excluded relevant intangibles debits and excluded relevant intangibles credits U.K.

(1) For the purposes of section 407 (and this section)—

(a) a debit is a “relevant intangibles debit” if it is brought into account under a provision of Part 8 of CTA 2009 (intangible fixed assets) that is listed in column 1 of the following table;

(b) a relevant intangibles debit is “excluded” to the extent indicated in the corresponding entry in column 2 of the table.

Provision	Excluded debits
section 729	excluded in full
section 731	excluded in full
section 732	excluded if and to the extent that its amount is determined by reference to an excluded intangibles credit
section 735	excluded in full
section 736	excluded in full
section 872	excluded in full
section 874	excluded in full

(2) For the purposes of section 407 (and this section)—

(a) a credit is a “relevant intangibles credit” if it is brought into account under a provision of Part 8 of CTA 2009 (intangible fixed assets) that is listed in column 1 of the following table;

(b) a relevant intangibles credit is “excluded” to the extent indicated in the corresponding entry in column 2 of the table.

Provision	Excluded credits
section 723	excluded if and to the extent that its amount is determined by reference to excluded intangible debits and excluded intangible credits
section 725	excluded if and to the extent that its amount is determined by reference to an excluded intangibles debit
section 735	excluded if and to the extent that the cost of the asset in question exceeds its tax written-down value
section 872	excluded in full
section 874	excluded in full

(3) In the table in subsection (2)—

(a) “tax written-down value” has the same meaning as in Part 8 of CTA 2009 (see Chapter 5 of that Part);

(b) “the cost of the asset” has the same meaning as in section 736 of that Act.

409 Double taxation relief U.K.

(1) This section applies where—

(a) apart from this section, an amount of income (“the relevant amount”) would meet condition A or B in section 406 in relation to a relevant accounting period of a company, and

(b) the amount of corporation tax chargeable in respect of the relevant amount is reduced under section 18(2) (entitlement to credit for foreign tax reduces UK tax by amount of the credit).

(2) The relevant amount is treated, for the purposes of section 406(2) (meaning of “adjusted corporation tax earnings”) as not meeting the condition mentioned in subsection (1)(a) to the extent that it consists of notional untaxed income.

(3) For this purpose, the amount of the relevant amount that consists of “notional untaxed income” is—

where—

A is the amount of the reduction mentioned in subsection (1)(b);

B is the rate of corporation tax payable by the company, before any credit under Part 2 (double taxation relief), on the company's profits for the relevant accounting period.]