The main reliefs from corporation tax are:
- Film relief. This gives an investee company a film corporation tax credit equal to 32% of the lower of:
- the eligible expenditure,
- 80% of the total production cost, and
The 32% is uplifted in certain regional areas to 37% (years 1 and 2), 35% in year 3, and 34% in year 4.
- Charges, i.e., interest, annual payments and royalty payments (s 243).
- Interest on money borrowed to invest in another company (s 247), but such relief is denied in the case of lending between connected companies if there is a mismatch between interest lent and claimed.
- Investment in renewable energy (s 486B).
- Research and development expenditure – a 25% tax credit against corporation tax liability and can lead to a repayment of up to 33% of unused tax credit not fully used in the first accounting period (s 766). Grants must be deducted from qualifying R&D expenditure.
- For micro and small companies (subject to EU approval):
- R&D tax credit rate is 30%.
- The payable element of the R&D tax credit is based on twice the current year payroll.
- Pre-trading R&D expenditure can qualify but is limited to PAYE, USC and VAT liabilities for the same period.