Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
Updated
, see all updates

PMA: FYA: First-year tax credits: the amount of payable tax credit, the upper limit of relief, PAYE & NICs liabilities, interaction with R&D tax credits

CAA01/Sch.A1 para 2, para 17

Amount of payable tax credit

A company may claim a first-year tax credit of 19% of its surrenderable loss, but the amount of payable credit cannot be more than the upper limit. The upper limit is the greater of:

  1. the company’s total PAYE and NIC liabilities for payment periods ending in the chargeable period and
  2. £250,000.

 

The PAYE liability for a payment period is the income tax which the company has to account for under the PAYE regulations, ignoring any deduction that the company may make for child tax credit or working tax credit.

The NIC liability for a payment period is the Class 1 NIC which the company is required to account to HMRC for, ignoring any deductions the company is authorised to make for payments of statutory sick pay, statutory maternity pay, child tax credit or working tax credit.

A payment period is a period which ends on the 5th of the month and for which the company is required to account for income tax and NI contributions.

Interaction with research & development tax credits

A company may be eligible to claim R&D tax credits as well as first-year tax credits. There is no interaction between the maxima or upper limits in these tax credit regimes and the first-year tax credit upper limit is not reduced when a company claims an R&D tax credit.