Corporation Tax Act 2009 section 853

Grants to be left out of account for tax purposes

Section 853 ensures that certain government grants — specifically regional development grants and equivalent Northern Ireland grants — are excluded from the intangible fixed assets tax rules, so they do not create taxable gains or distort allowable losses and capitalised expenditure.

• The section applies to regional development grants under Part 2 of the Industrial Development Act 1982 and equivalent grants made under Northern Ireland legislation that the Treasury has declared to correspond to such grants.
• Any gain arising from one of these exempt grants is ignored for the purposes of the intangible fixed assets rules, even if the grant is recognised in the company's profit or loss in its accounts.
• If an exempt grant has the effect of reducing a loss recognised in the company's accounts, or reducing the capitalised cost of an intangible fixed asset, the amount of that reduction is added back for tax purposes under this Part.
• The overall effect is to ensure that these public-funded grants are tax-neutral within the intangible fixed assets regime — they neither generate a taxable credit nor erode deductible amounts.