Corporation Tax Act 2010 section 356JHB

Carrying forward of unactivated allowance

Section 356JHB explains how a company's unused (unactivated) cluster area allowance is carried forward to the next period, after deducting any allowance that has been activated and any amounts transferred out on a disposal of shares.

• At the end of each accounting period, a company calculates its remaining unactivated allowance for a cluster area by taking the closing balance of unactivated allowance and subtracting both the activated allowance for the period and any amounts transferred out following share disposals.
• If the result of this calculation (U minus A minus T) is greater than zero, that remaining amount is treated as cluster area allowance held by the company for the next period, effective from the beginning of that period.
• If the accounting period is followed by a reference period for that cluster area, the carry-forward goes into that reference period; otherwise, it goes into the company's next accounting period.
• This mechanism ensures that any cluster area allowance not yet used or transferred is preserved and available for future periods rather than being lost.