OT21580 | Investment Allowance: How allowance is used

The activated allowance may be set against the company’s adjusted ring fence profits for an accounting period so as to reduce a company’s liability to supplementary charge but not so as to reduce the profits below zero (CTA10/S332E(1)).

If there is an alteration in a company’s adjusted ring fence profits after the use of allowance, any necessary adjustments must be made to the calculation of the amount of activated allowance carried forward (CTA10\S332J).

Where a company has any combination of investment allowance, onshore allowance and cluster area allowance available it may choose the order in which those allowances are utilised (CTA10/S330ZA(2)).