Corporation Tax Act 2009 section 1112C

Calculation of relevant PAYE and NIC liabilities

Section 1112C sets out how to calculate a company's relevant PAYE and NIC liabilities for a payment period, for the purposes of the cap on R&D tax relief by reference to PAYE and NIC.

• Start with the company's total PAYE and NIC liabilities for the payment period as the baseline figure.
• Add any PAYE and NIC amounts borne by a connected company that provided externally provided workers or carried out contracted-out R&D on the company's behalf.
• Deduct any of the company's own PAYE and NIC amounts that relate to workers it provided, or R&D it performed, for a connected company — because those amounts are instead picked up in that other company's calculation.
• The formula for externally provided workers apportions the connected company's staffing-related PAYE and NIC costs by the ratio of expenditure on the worker taken into account in the claiming company's qualifying expenditure to the total qualifying expenditure on that worker.