Section 49B | Applying section 42(2) to non-trading credits from loan relationships etc ^F1

(1)Subsection (2) applies for the purposes of section 42(2) if—^F1

(a)the company has a non-trading credit relating to an item, and^F1

(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.^F1

(2)Credit for the foreign tax in respect of that item must not exceed—^F1

(3)D in the formula in subsection (2) is calculated as follows—^F1

Step 1 Calculate the total amount (“TNTD”) of the non-trading debits which are to be brought into account by the company—as the non-trading credit.

(a)in the same accounting period, and

(b)in respect of the same loan relationship, derivative contract or intangible fixed asset,

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—^F1

“intangible fixed asset” has the same meaning as in Part 8 of CTA 2009,

“non-trading credit” means—

(a)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

(b)a non-trading credit for the purposes of Part 8 of CTA 2009 (intangible fixed assets), and

“non-trading debit” means—

(a)a non-trading debit for the purposes of Part 5 of CTA 2009, or

(b)a non-trading debit for the purposes of Part 8 of CTA 2009.