MTT21400 | Calculating the effective tax rate: Adjusted profits: Tax credits - Overview

The underlying profits of a member of a group and its covered tax balance (if necessary) need to be adjusted to ensure that qualifying refundable tax credits and marketable transferable tax credits are accounted for as income, rather than a tax expense.

See MTT21410 for the definition of qualifying refundable tax credits, and MTT21430 for the definition of marketable transferable tax credits.

Tax credits that are not marketable transferable tax credits or qualifying refundable tax credits are generally to be accounted for as a reduction to tax expense, rather than income (see MTT21440).

This is set out in Section 147A of Finance (No.2) Act 2023.