Commentary

D1.1204 Small ring-fence profits rate

Corporate tax
Corporate tax | Commentary

D1.1204 Small ring-fence profits rate

Corporate tax | Commentary

Small profits rate—post 1 April 2015

D1.1204 Small ring-fence profits rate

The provisions in this article apply from 1 April 2015 to ring fence profits only. From this date for non-ring fence trades there is only one 'main rate' of corporation tax (see D1.1201). Where an accounting period straddles this date it is split into two notional periods. For the small profits rate that applied before 1 April 2015 (see D1.1205).

From 1 April 2015 tax is charged at two rates on ring fence profits (ie profits from oil extraction and oil rights in the UK and the UK Continental Shelf). The 'main ring fence profits rate' is fixed at 30% (see D1.1201) and the small ring fence profits rate is 19% if it is a UK resident company with 'augmented profits' below £300,0001 (described as the 'lower limit' in the legislation2).

From 6 April 2016, augmented profits comprise the company's adjusted taxable total profits and any exempt ABGH distribution income that is not excluded under the rules described below3. The term 'ABGH distribution' was introduced as part of the changes introduced to dividend taxation from 6 April 2016 which included abolition of the dividend tax credit, changes to dividend tax rates and the introduction of a dividend allowance. An exempt ABGH distribution is a distribution that4:

  1.  

    •     falls within CTA 2010, s 1000(1)(para A, B, G or H); see D5.102 – essentially this covers any dividend/distribution paid by a company, any distribution arising as a result of a transfer of

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