Corporation Tax Act 2009 section 86A

Contributions to flood and coastal erosion risk management projects

Section 86A provides a tax deduction for companies that make qualifying contributions to qualifying flood or coastal erosion risk management projects, subject to conditions around disqualifying benefits and clawback of refunds or compensation.

• A company carrying on a trade may deduct expenses of making a qualifying contribution to a qualifying flood or coastal erosion risk management project, where the expenses would not otherwise be deductible (ignoring capital allowances)
• No deduction is allowed if the contributing company or a connected person receives, or is entitled to receive, a disqualifying benefit in connection with the contribution, regardless of the source of that benefit
• If a deduction has been claimed and the company or a connected person later receives a refund of a monetary contribution or compensation for a services contribution, that amount must be brought into account as trading income or, if the trade has ceased, as a post-cessation receipt
• A disqualifying benefit is money or other property, but specifically excludes refunds of the contribution, compensation for services contributed, flood defence structures or additions to them put in place by the project, and land, plant, machinery, or rights over land used for flood or coastal erosion risk management purposes under the project