Corporation Tax Act 2010 section 357PB

Additional deduction under section 1044 of CTA 2009

Section 357PB adjusts the SME research and development additional deduction available under section 1044 of CTA 2009 for Northern Ireland companies, so that the deduction is scaled up to deliver the same tax benefit at the lower Northern Ireland corporation tax rate as it would at the main UK rate.

• Where a Northern Ireland company is entitled to the SME R&D additional deduction under section 1044 of CTA 2009, and some or all of its qualifying expenditure is Northern Ireland qualifying expenditure, an adjusted percentage applies to the Northern Ireland portion.
• The adjusted percentage is calculated as A × (MR / NIR), where A is the standard percentage in section 1044(8) of CTA 2009, MR is the main UK corporation tax rate, and NIR is the Northern Ireland corporation tax rate for the relevant financial year.
• Because the Northern Ireland rate is lower than the main rate, the ratio MR / NIR is greater than one, meaning the adjusted percentage is higher than the standard percentage, preserving the cash value of the relief.
• The portion of the additional deduction calculated using the adjusted percentage forms part of the company's Northern Ireland profits or Northern Ireland losses of the trade.