Taxes Consolidation Act 1997 section 769K

Adaptation of provisions relating to relief for relevant trading losses and relevant charges on income

Section 769K provides for the reduction of relevant trading losses and relevant trading charges relating to a qualifying asset under the knowledge development box (KDB) regime, and for their subsequent relief on a value basis.

• Relevant trading losses and charges attributable to a KDB qualifying asset are reduced by the formula (QE + UE) / OE, where QE is qualifying expenditure, UE is uplift expenditure, and OE is overall expenditure on the qualifying asset.
• The reduced losses or charges may then be relieved on a value basis under sections 243A, 396A, 420A, 243B, 396B, or 420B, with the loss or charge treated as further reduced by 20 per cent for the purposes of those provisions.
• Where a company makes a subsequent claim for relief after an initial value basis claim, the amount of losses or charges available for that subsequent claim is reduced by 125 per cent of the amount claimed under the initial claim.
• The Finance Act 2022 amendments introducing the 20 per cent and 125 per cent figures are subject to a commencement order by the Minister for Finance, with transitional split accounting period rules applying where an accounting period straddles the commencement date.