Chapter 8: “Tested expense amount” and “tested income amount”
Overview
613.This Chapter sets out how two key amounts, the “tested expense amount” and the “tested income amount”, are to be calculated. The “tested expense amount” must be calculated so that, by comparison with the “available amount” dealt with in Chapter 9, it can be determined whether the adjustments provided for by Chapters 3 and 4 are necessary. In calculating the amount of financing income the “tested income amount” is exempted from corporation tax by Chapter 4.
Section 329: The tested expense amount
614.Under this section the “tested expense amount” for a worldwide group is built up from the sum of each relevant group company’s “net financing deduction” (explained in subsections (2) to (5)). It is based on paragraph 70 of Schedule 15 to FA 2009.
Section 330: The tested income amount
615.Under this section the “tested income amount” for a worldwide group is built up from the sum of each UK group company’s “net financing income” (explained in subsections (2) to (5)). It is based on paragraph 71 of Schedule 15 to FA 2009.
Section 331: Companies with net financing deduction or net financing income that is small
616.This section provides the figure used to determine whether a relevant group company’s net financing deduction or a UK group company’s net financing income is “small” (less than £500,000) and allows the amount to be increased or decreased by Treasury order. It is based on paragraph 72 of Schedule 15 to FA 2009.