Section 49B — Finance Act 2014: Applying section 42(2) to non-trading credits from loan relationships etc

Applying section 42(2) to non-trading credits from loan relationships etc 49B 1 Subsection (2) applies for the purposes of section 42(2) if—

a the company has a non-trading credit relating to an item, and b there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax.

2 Credit for the foreign tax in respect of that item must not exceed— R × ( NTC – D ) where— R has the same meaning as in section 42(2), NTC is the amount of the non-trading credit, and D is the amount given by subsection (3).

3 D in the formula in subsection (2) is calculated as follows— Step 1 Calculate the total amount (“TNTD”) of the non-trading debits which are to be brought into account by the company—

in the same accounting period, and in respect of the same loan relationship, derivative contract or intangible fixed asset, as the non-trading credit. Step 2 Calculate the total (“A”) of the amounts which, as amount D, have already been deducted under subsection (2) from other non-trading credits which are to be brought into account in the same period and in respect of the same relationship, contract or asset. Step 3 Calculate the amount given by— TNTD – A Step 4 If the amount calculated at step 3 is greater than or equal to NTC, then D equals NTC. Otherwise, D is the amount calculated at step 3.

4 In this section— “ intangible fixed asset ” has the same meaning as in Part 8 of CTA 2009, “ non-trading credit ” means—

a non-trading credit for the purposes of Part 5 of CTA 2009 (which is about loan relationships but also has application in relation to deemed loan relationships and derivative contracts), or a non-trading credit for the purposes of Part 8 of CTA 2009 (intangible fixed assets), and “ non-trading debit ” means—

a non-trading debit for the purposes of Part 5 of CTA 2009, or a non-trading debit for the purposes of Part 8 of CTA 2009.