Finance Act 2021

PART 3 U.K.Consequential amendments

FA 1998U.K.

12U.K.In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), in paragraph 8(1) (calculation of tax payable), in the second step, for “Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small ring fence profits etc)” substitute “ Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits) ”.

Corporation Tax (Instalment Payments) Regulations 1998U.K.

13(1)The Corporation Tax (Instalment Payments) Regulations 1998 (interpretation) are amended as follows.U.K.

(2)In regulation 2 (interpretation)—

(a)in paragraph (1), omit the entry for “related 51% group company”,

(b)in paragraph (2), for “section 279G” substitute “ sections 18L and 18M ”, and

(c)after that paragraph insert—

“(2A)The rules in Part 3A of CTA 2010 (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D of that Act apply for the purposes of these Regulations.”

(3)In regulations 3 and 3A (large and very large companies), for “related 51% group” (in each place) substitute “ associated ”.

FA 2000U.K.

14U.K.In Schedule 22 to FA 2000 (tonnage tax), in paragraph 57(6)(a) (exclusion of relief or set-off against tax liability), for “Chapter 3A of Part 8 of CTA 2010 (marginal relief for companies with small ring fence profits)” substitute “ Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits) ”.

CAA 2001U.K.

15U.K.CAA 2001 is amended as follows.

16(1)Section 99 (long-life assets: the monetary limit) is amended as follows.U.K.

(2)In subsection (4)—

(a)for “In the case of a company (“C”), if, in a chargeable period, one or more companies are related 51% group companies of C” substitute “ If, in a chargeable period, a company has one or more associated companies ”, and

(b)in the definition of “N”, for “number of related 51% group” substitute “ number of associated ”.

(3)After that subsection insert—

“(4A)The rules in Part 3A of CTA 2010 (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D of that Act apply for the purposes of subsection (4).”

17U.K.In Part 2 of Schedule 1 (defined expressions), omit the entry for “related 51% group company”.

CTA 2010U.K.

18U.K.CTA 2010 is amended as follows.

19U.K.In section 1(2) (overview of Act)—

(a)for “Parts 4” substitute “ Parts 3A ”, and

(b)before paragraph (b) insert—

“(a)relief for companies with small profits (other than ring-fence profits) (see Part 3A),”.

20(1)Section 357BN (profits arising from the exploitation of patents etc: small claims treatment) is amended as follows.U.K.

(2)In subsection (7)—

(a)in paragraph (a), for “no company is a related 51% group company of the company” substitute “ the company has no associated company ”,

(b)in paragraph (b), for “one or more companies are related 51% group companies of the company” substitute “ the company has one or more associated companies ”, and

(c)in the definition of “N”, for “those related 51% group” substitute “ those associated ”.

(3)After subsection (8) insert—

“(9)The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of this section.”

21(1)Section 357BNB (profits arising from the exploitation of patents etc: small claims figure election) is amended as follows.U.K.

(2)In subsection (6), for “no company is a related 51% group company of the company” substitute “ the company has no associated company ”.

(3)In subsection (7)—

(a)for “one or more companies are related 51% group companies of the company” substitute “ the company has one or more associated companies ”, and

(b)in the definition of “N”, for “those related 51% group” substitute “ those associated ”.

(4)After subsection (9) insert—

“(10)The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of this section.”

22U.K.In section 534 (REITs: profits), after subsection (2) insert—

“(3)Profits which—

(a)arise from the residual business of a UK company which is, or is a member of, a UK REIT, and

(b)are charged to corporation tax,

are to be charged at a rate determined without reference to sections 18A and 18B (companies with small profits).”

23U.K.In section 535 (REITs: gains), after subsection (5) insert—

“(6)Gains which—

(a)accrue to residual business of a company which is, or is a member of, a UK REIT, and

(b)are charged to corporation tax,

are to be charged at a rate determined without reference to sections 18A and 18B (companies with small profits).”

24U.K.In section 543 (REITs: financing-cost ratio), after subsection (4) insert—

“(5)Accordingly, it is charged to corporation tax at the main rate of corporation tax.”

25U.K.In section 551 (REITs: distribution to holder of excessive rights), after subsection (5) insert—

“(6)Accordingly, it is charged to corporation tax at the main rate of corporation tax.”

26U.K.In section 564 (REITs: breach of condition as to distribution of profits), after subsection (3) insert—

“(4)Accordingly, it is charged to corporation tax at the main rate of corporation tax.”

27U.K.In section 614 (open-ended investment companies: applicable corporation tax rate), at the end insert “ (and sections 18A and 18B (relief for companies with small profits) do not apply) ”.

28U.K.In section 618 (authorised unit trusts: applicable corporation tax rate), at the end insert “ (and sections 18A and 18B (relief for companies with small profits) do not apply) ”.

29U.K.For section 627 substitute—

“627Meaning of “main rate of corporation tax” for companies with ring fence profits or small profits

(1)This section applies if corporation tax chargeable on any profits of a company for a financial year—

(a)is to be charged at the main ring fence profits rate,

(b)is to be charged at the standard small profits rate or the small ring profits rate, or

(c)is to be reduced by reference to the standard marginal relief fraction or the ring fence marginal relief fraction (within the meaning of Part 3A or Chapter 3A of Part 8).

(2)References in this Chapter to the main rate of corporation tax are to be taken, so far as relating to profits charged at any of the rates mentioned in subsection (1)(a) or (b), as references to the rate or rates concerned.

(3)References in this Chapter to the main rate of corporation tax are, if corporation tax is reduced as mentioned in subsection (1)(c), to be taken as including references to the fraction or fractions concerned (and with references to a rate being “fixed” or “proposed” read accordingly as references to the fraction or fractions concerned being fixed or proposed).”

30U.K.In section 1119 (Corporation Tax Acts definitions), omit the definition of “related 51% group company”.

31U.K.In Schedule 4 (index of defined expressions)—

(a)insert the following entries at the appropriate places—

(b)in the entry for “augmented profits”—

(i)in the first column, before “Chapter 3A” insert “ Part 3A or ”, and

(ii)in the second column, for “section 279G” substitute “ sections 18L and 18M (including as applied by section 279EA) ”,

(c)in the entry for “the lower limit”—

(i)in the first column, before “Chapter 3A” insert “ Part 3A or ”, and

(ii)in the second column, after “section” insert “ 18D or ”,

(d)in the entry for “the marginal relief fraction”, in the first column, for “marginal” substitute “ ring fence marginal ” (and, accordingly, move the entry to the appropriate place),

(e)omit the entry for “related 51% group company”,

(f)for the entries for “ring fence profits” (in Parts 3 and 8) substitute—

(g)in the entry for “the upper limit”—

(i)in the first column, before “Chapter 3A” insert “ Part 3A or ”, and

(ii)in the second column, after “section” insert “ 18D or ”.

FA 2012U.K.

32U.K.In section 102 of FA 2012 (policyholders' rate of tax on policyholders' share of I - E profit), at the end insert—

“(5)The policyholders' share of the I - E profit for an insurance company's accounting period is to be left out of account in determining for the purposes of Part 3A of CTA 2010 (companies with small profits)—

(a)the augmented profits of the company for the accounting period, and

(b)the taxable total profits of the company for the accounting period.”