Section 1044 Additional deduction in calculating profits of trade

United Kingdom

(1)

A company is entitled to corporation tax relief for an accounting period if it meets each of conditions A to F1F.

(2)

Condition A is that the company is a small or medium-sized enterprise in the period.

F2(2A)

Condition B is that the company—

(a)

meets the R&D intensity condition in the period, or

(b)

obtained relief under this Chapter for its most recent prior accounting period of 12 months’ duration, having met the R&D intensity condition in that period.

F3(3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)

Condition C is that the company carries on a trade in the period.

(5)

Condition D is that the company has qualifying Chapter 2 expenditure which is allowable as a deduction in calculating for corporation tax purposes the profits of the trade for the period.

F4(5A)

Condition E is that the company makes a loss in the trade in the period.

(5B)

Condition F is that the company is not an ineligible company (see section 1142).

(6)

For the company to obtain the relief it must make a claim F5(see Part 9A of Schedule 18 to the FA 1998, and also sections 1045A and 1112F).

F6...

(7)

The relief is an additional deduction in calculating the profits of the trade for the period. F7The deduction is, in particular, additional to any given under section 87.

(8)

The amount of the additional deduction is F886% of the qualifying Chapter 2 expenditure.

F9(9)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10)

For the meaning of “qualifying Chapter 2 expenditure” see section 1051.

Annotations

Textual amendments

F1: Word in s. 1044(1) substituted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(a), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2
F2: S. 1044(2A) inserted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(b), 16 (with Sch. 1 paras. 18, 20); S.I. 2024/286, reg. 2
F3: S. 1044(3) omitted (with effect in accordance with Sch. 3 para. 39 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 3 para. 3(3)
F4: S. 1044(5A)(5B) inserted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(c), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2
F5: Words in s. 1044(6) inserted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(d)(i), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2
F6: Words in s. 1044(6) omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(d)(ii), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2
F7: Words in s. 1044(7) inserted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(e), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2
F8: Word in s. 1044(8) substituted (in relation to expenditure incurred on or after 1.4.2023) by Finance Act 2023 (c. 1), s. 4(3)(a)(4)
F9: S. 1044(9) omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 6(4)(f), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2

Notes on Part 13

Textual amendments

F1: Words in Pt. 13 heading omitted (with effect in relation to accounting periods beginning on or after 1.4.2024) by virtue of Finance Act 2024 (c. 3), Sch. 1 paras. 3, 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2

Notes on Chapter 2

Textual amendments

F1: Pt. 13 Ch. 2 heading substituted (with effect in relation to accounting periods beginning on or after 1.4.2024) by Finance Act 2024 (c. 3), Sch. 1 paras. 6(2), 16 (with Sch. 1 para. 18); S.I. 2024/286, reg. 2