Corporation Tax Act 2010 section 206

The relievable amount

Section 206 explains how to calculate the amount of corporation tax relief available when a company disposes of a qualifying investment to a charity, either as an outright gift or at less than full market value.

• Where a qualifying investment is gifted to a charity, the relievable amount is calculated as the net benefit to the charity plus incidental disposal costs, minus any benefits the company or connected persons received in return.
• Where the disposal is at an undervalue rather than an outright gift, the starting point is the excess of the net benefit to the charity over the actual consideration received, with only a restricted portion of incidental costs added.
• The net benefit to the charity (V) must be assessed both at the time of disposal and immediately afterwards, with the lower of the two figures used in the calculation.
• If either formula produces a negative result, the relievable amount is simply nil — there is no negative relief.