769D Manner of making allowances and charges

(1) An allowance or charge is to be made to or on a company in taxing the company’s trade (that is in computing trading income for corporation tax purposes) if the capacity rights in question are owned by that company for the purpose of a trade which that company is carrying on.

(2) Where an allowance is to be made to a non-trading company, it is made by way of discharge or repayment of tax in the normal way and is available only against income from the use of capacity rights. However, the effect of the next section is that in so far as an allowance cannot be given effect because of insufficient income from the use of capacity rights in the year of claim, it can be set against the company’s other income for that year and, where necessary, it can be carried forward for offset against income from the capacity rights in subsequent years.

Relevant Date: Finance Act 2021