INTM167350 - UK residents with foreign income or gains: corporation tax: ACT and charges: examples (ACT abolished for accounting periods ending after 5 April 1999)
Example 1 - Allocation of ACT
Accounting period to 31 March 1999
- | UK | For. 1 | For. 2 | For. 3 | For. 4 | Total |
---|---|---|---|---|---|---|
- | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
Income (after set-offs under ICTA88/S797(3)) | 400 | 100 (FT nil) | 200 (FT 40%) | 200 (FT 15%) | 100 (FT 5%) | 1,000 |
CT @ 31% | 124 | 31 | 62 | 62 | 31 | 310 |
DTR (Credit) | - | - | (62) (limit) | (30) (all) | (5) (all) | (97) |
CT after DTR | 124 | 31 | - | 32 | 26 | 213 |
ACT (Max 20% of income - Available 200) | (80) (S239(2) limit) | (20) (S239(2) limit) | - | (32) (lower limit) | (20) (S239(2) limit | (152) |
Mainstream CT | 44 | 11 | - | - | 6 | 61 |
Example 2 - Foreign branch/allocation of charges/allocation of ACT
Accounting period to 31 March 1999
- | £ |
---|---|
Trading profits (of which £100,000 from foreign branch have borne foreign tax of £40,000) | 300,000 |
Interest income | 100,000 |
Charges | 50,000 |
ACT | 90,000 |
Computation: | - |
Case I | 300,000 |
Case III | 100,000 |
- | 400,000 |
Charges | (50,000) |
Charged to CT | 350,000 |
CT on profits of £350,000 @ 31% | 108,500 |
DTR (restricted to CT on branch profits) | (31,000) |
CT subject to ACT set-off | 77,500 |
ACT (see below) | (50,000) |
Net CT due | 27,500 |
Computation of ACT restriction under ICTA88/S797
- | Case I (Foreign Branch) | Case I (Domestic Component) | Case III | Total |
---|---|---|---|---|
- | £ | £ | £ | £ |
Profits | 100,000 | 200,000 | 100,000 | 400,000 |
Charges | - | - | (50,000) | (50,000) |
- | 100,000 | 200,000 | 50,000 | 350,000 |
CT @ 31% | 31,000 | 62,000 | 15,500 | 108,500 |
DTR | (31,000) | - | - | (31,000) |
CT subject to ACT | - | 62,000 | 15,500 | 77,500 |
ACT set-off | - | (40,000) (a) | (10,000) (b) | (50,000) |
Net CT | - | 22,000 | 5,500 | 27,500 |
- CT limit 200,000 @ 20% = 40,000
- ACT limit 50,000 @ 20% = 10,000