Corporation Tax Act 2010 section 269ZR

Deductions allowance for company in a group

Section 269ZR sets out how to calculate the deductions allowance for a company that is a member of a group where at least one other group member is also within the charge to corporation tax.

• A group shares a single annual deductions allowance of £5,000,000, which must be allocated among its members; a company's allowance is the sum of any group allocation plus its own non-group allowance for days it was outside the group
• The non-group deductions allowance is calculated as the number of days the company was not in a qualifying group divided by the total days in the accounting period, multiplied by £5,000,000
• Regardless of how the amounts are combined, a company's total deductions allowance for any twelve-month period cannot exceed £5,000,000
• Where the accounting period is shorter than twelve months, both the non-group allowance and the overall £5,000,000 cap are reduced proportionally