Corporation Tax Act 2009 section 301

Calculation of non-trading profits and deficits from loan relationships: non-trading credits and debits

Section 301 explains how a company calculates whether it has a non-trading profit or a non-trading deficit from its loan relationships for an accounting period, by comparing non-trading credits with non-trading debits.

• Non-trading credits and debits are those loan relationship amounts that are not brought into account as part of a trade — they arise from loan relationships held for non-trading purposes, such as investment activities
• If non-trading credits exceed non-trading debits for the period, the company has non-trading profits equal to the excess; if non-trading debits exceed non-trading credits, the company has a non-trading deficit equal to the excess
• Certain debits that would otherwise be trading debits — such as pre-trading expenditure and amounts from relevant non-lending relationships — may also be treated as non-trading credits or debits under specific rules
• Non-UK resident companies must additionally take into account the territorial scope rules, which may restrict which loan relationship amounts fall within the UK corporation tax charge