Corporation Tax Act 2010 section 357PF

Additional deduction under section 1087 of CTA 2009

Section 357PF adjusts the research and development tax relief available to Northern Ireland companies that claim the large company R&D deduction (under Chapter 7 of Part 13 of CTA 2009), so that the benefit of the deduction reflects the Northern Ireland corporation tax rate rather than the main UK rate.

• Where a Northern Ireland company claims the large company R&D deduction and some or all of its qualifying expenditure is Northern Ireland expenditure, the normal deduction percentages are replaced with adjusted percentages.
• The adjusted percentages are calculated using a formula that scales the standard deduction percentages by the ratio of the main UK corporation tax rate to the Northern Ireland rate, ensuring the relief is proportionate to the lower rate.
• There are two adjusted percentages — the "adjusted amount A percentage" and the "adjusted amount B percentage" — each corresponding to one of the two standard deduction percentages set out in the CTA 2009 rules.
• The portion of the additional deduction calculated using these adjusted percentages is treated as part of the company's Northern Ireland profits or Northern Ireland losses of the trade.