Corporation Tax Act 2010 section 357JJ

Restricted deduction: Northern Ireland rate lower than main rate

Section 357JJ sets out how to calculate the restricted deduction when a Northern Ireland trading loss is relieved against mainstream (non-Northern Ireland) profits and the Northern Ireland corporation tax rate is lower than the main UK rate.

• When a Northern Ireland loss is set against mainstream profits and the Northern Ireland rate is lower than the main rate, the deduction must be scaled down to reflect the rate difference.
• If the profit period falls within a single financial year, the restricted deduction is calculated as: (Northern Ireland rate ÷ main rate) × the unmatched loss, plus any matched loss.
• If the profit period spans more than one financial year, the unmatched loss is time-apportioned between the years, and only the portions falling in years where the Northern Ireland rate is lower than the main rate are scaled down by the ratio of Northern Ireland rate to main rate.
• A "matched" loss is one relieved against Northern Ireland profits (and is not restricted), whereas an "unmatched" loss is one relieved against non-Northern Ireland profits (and must be scaled down).

---