Corporation Tax Act 2010 section 357VA

Modification of section 357A

Section 357VA modifies the Patent Box election rules so that, where a company has both mainstream and Northern Ireland trading profits from intellectual property, two separate deductions are calculated and applied accordingly.

• The Patent Box deduction under section 357A is split into a mainstream deduction (covering non-Northern Ireland IP profits) and a Northern Ireland deduction (covering Northern Ireland IP profits).
• The mainstream deduction uses the standard Patent Box formula but applies it only to relevant mainstream IP profits — that is, the portion of relevant IP profits not classified as Northern Ireland IP profits.
• The Northern Ireland deduction is calculated as RNIP × ((NIR − IPR) / NIR), and is only available where the Northern Ireland corporation tax rate exceeds the special IP rate of 10%.
• Each deduction feeds into its respective profit stream: the mainstream deduction forms part of mainstream profits or losses, and the Northern Ireland deduction forms part of Northern Ireland profits or losses.