Corporation Tax Act 2009 section 1114

Total R&D aid

Section 1114 sets out the formula used to calculate the total amount of R&D state aid a company has received in respect of expenditure attributable to a particular research and development project, for the purposes of applying the cap on R&D aid.

• Total R&D aid is calculated using the formula: A = (TC + R + (P × CT)) – (N × CT), bringing together tax credits, tax liability reductions, potential relief, and a deduction for any notional R&D expenditure credit
• TC represents tax credits received, R represents the actual reduction in the company's tax liability, and P represents potential relief that has not yet reduced tax but may do so in the future
• CT is the main rate of corporation tax at the time of calculation, or the main ring fence profits rate if the company carries on a ring fence trade (broadly, oil and gas extraction activities)
• N is the notional R&D expenditure credit, which is deducted (after being multiplied by the corporation tax rate) to avoid double-counting relief already reflected elsewhere in the formula