Capital Allowances Act 2001 section 51JA

Sixth restriction: allocation where profits chargeable at NI rate

Section 51JA restricts how the annual investment allowance (AIA) is allocated where a company has qualifying expenditure relating to Northern Ireland rate activities in a year when the Northern Ireland corporation tax rate is lower than the main UK rate.

• This restriction applies when one of the existing AIA sharing restrictions (for related companies or groups) is in force and some of the qualifying expenditure relates to a Northern Ireland rate activity
• Expenditure counts as "incurred in a low-rate year" if it falls in a financial year where the Northern Ireland corporation tax rate is lower than the main UK rate
• A formula limits the amount of AIA that can be allocated to non-Northern Ireland activities: the available AIA is multiplied by the proportion of low-rate year expenditure that does not relate to Northern Ireland rate activities
• The formula is A × (T − NI) / T, where A is the AIA otherwise available, T is total qualifying expenditure in the low-rate year, and NI is the portion of that expenditure relating to Northern Ireland rate activities