Taxation (International and Other Provisions) Act 2010 section 54

Non-trading debits on loan relationships

Section 54 sets out how a company allocates its non-trading debits on loan relationships across its different profits for the purpose of calculating the double taxation relief credit limit.

• Where a company has at least one non-trading credit eligible for double taxation relief, it may allocate a portion of its non-trading debits across its profits for the period as it sees fit.
• The amount available for free allocation equals total non-trading debits less any part of the non-trading deficit that has been carried back, carried forward, or surrendered as group relief.
• If the company also uses all or part of the excess deficit (XS) against current-year profits, the corresponding portion of non-trading debits must be allocated to those same profits — removing the company's freedom of choice for that amount.
• A non-trading credit is eligible for double taxation relief if there is foreign tax on the underlying item for which credit is allowable against UK tax under a double taxation arrangement.