{
  "url": "https://openlegislation.uk/taxation-international-and-other-provisions-act-2010/section-42",
  "json_url": "https://openlegislation.uk/taxation-international-and-other-provisions-act-2010/section-42.json",
  "legislation": "ukpga/2010/8",
  "legislation_title": "Taxation (International and Other Provisions) Act 2010",
  "legislation_url": "https://openlegislation.uk/taxation-international-and-other-provisions-act-2010",
  "path": "section/42",
  "kind": "section",
  "number": "42",
  "heading": "Amount of limit",
  "text": "(1) Subsection (2) is about the amount of credit allowed under section 18(2) against corporation tax to which a company is liable in respect of any income or chargeable gain.\n(2) The credit must not exceed—\nR×IGwhere—\nR is the rate of corporation tax payable by the company, before any credit under this Part, on the company's income or chargeable gains for the accounting period in which the income arises or the gain accrues, and\nIG is the amount of the income or gain (but see subsection (3)).\n(3) For the purposes of applying subsection (2), IG is reduced (or extinguished) by any amount allocated to it under—\nsection 52(2) (general deductions),\nsection 53(2) (earlier years' deficits on loan relationships),\nsection 54(2) or (4) (debits on loan relationships),\nsection 55(5) (current year's deficits on loan relationships), or\nsection 56(2) (debits on intangible fixed assets).\n(4) Subsection (2) is to be read with—\nsection 43, which, if the company has a permanent establishment outside the United Kingdom, is about attributing profits to the establishment for the purposes of applying subsection (2),\nsections 44 to 49, which modify how subsection (2) applies in connection with allowing credit against tax on trade income (as defined in section 44), section 49B, which requires subsection (2) to be applied separately to certain non-trading credits, and\nsections 50 and 51, which require subsection (2) to be applied as if corporation tax were charged in a modified way on profits of the company for the period from loan relationships and intangible fixed assets.\n(5) See also section 49A which contains an additional limit on credit allowed in certain cases involving CFCs.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "F",
      "label": "F1",
      "text": "Words in s. 42(4) substituted (with effect in accordance with s. 292(9)(10) of the amending Act) by Finance Act 2014 (c. 26), s. 292(6)"
    },
    {
      "type": "F",
      "label": "F2",
      "text": "S. 42(5) inserted (retrospective to 1.1.2013) by Finance Act 2013 (c. 29), Sch. 47 paras. 12, 21"
    },
    {
      "type": "C",
      "label": "C1",
      "text": "Pt. 2 applied by 2010 c. 4, s. 269DL(6) (as inserted (with effect in accordance with Sch. 3 Pt. 3 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 3 para. 1)"
    },
    {
      "type": "C",
      "label": "C2",
      "text": "S. 42 excluded by 2010 c. 4, s. 269DL(8)(a) (as inserted (with effect in accordance with Sch. 3 Pt. 3 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 3 para. 1)"
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/ukpga/2010/8/section/42",
    "retrieved_at": "2026-10-29T09:10:17.008829+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}