Corporation Tax Act 2010 section 357PD

Tax credit under section 1054 of CTA 2009: amount of tax credit

Section 357PD sets out how the amount of a payable R&D tax credit is calculated for Northern Ireland companies that surrender losses under the SME R&D relief scheme, replacing the standard calculation rules with special provisions that reflect the Northern Ireland rate of corporation tax.

• Where a Northern Ireland company surrenders qualifying R&D losses in exchange for a payable tax credit, the normal calculation under section 1058(1) of CTA 2009 is disapplied and replaced by the rules in this section.
• Three separate calculation rules apply depending on whether the company has only a Northern Ireland surrenderable loss, only a mainstream surrenderable loss, or both types of loss.
• In each case, the tax credit is capped at the lower of the calculated amount (using the relevant percentage for Northern Ireland losses and/or the standard percentage for mainstream losses) and a PAYE and NIC liabilities cap.
• The "relevant percentage" used for Northern Ireland losses is derived from a formula — A × ((100 + B) / C) — which adjusts the standard tax credit percentage to account for the enhanced R&D deduction rates applicable to Northern Ireland trading profits.