Corporation Tax Act 2010 section 356EA

The closing balance of unactivated allowance for an accounting period

Section 356EA sets out how to calculate the closing balance of onshore allowance that a company holds but has not yet used (unactivated allowance) for a particular accounting period and site.

• The closing balance is calculated using the formula P + Q − R, where P is the onshore allowance generated in the period, Q is any amount carried forward from the previous period, and R is any reduction for equity disposals.
• P includes not only allowance generated directly but also any amounts treated as generated at the site through transfers between sites or certain deemed generation rules.
• Q captures unused allowance brought forward from either the immediately preceding accounting period or the immediately preceding reference period.
• R reduces the closing balance where equity in the site has been disposed of, ensuring the allowance reflects the company's continuing interest.