Commentary

D5.152 Non-small companies and distribution receipts

Corporate tax
Corporate tax | Commentary

D5.152 Non-small companies and distribution receipts

Corporate tax | Commentary

D5.152 Non-small companies and distribution receipts

As summarised at D5.150, distributions paid by a UK or overseas company are chargeable to corporation tax on the recipient unless the distribution is exempt. Two different regimes apply depending upon whether the recipient is a small company (see D5.151) or not small1. Provided a taxpayer does not elect otherwise (see D5.150), distributions received by companies that are not small in the accounting period of receipt will be exempt if2:

  1.  

    •     the distribution falls into an exempt class (see table summary below) and is not within the specific anti-avoidance provisions

  2.  

    •     the distribution is not a distribution on a non-commercial security (D5.120) or a distribution on a special security (D5.127). These two types of distributions are where interest is recharacterised as a distribution, the distribution will therefore generally be taxable income for the small company.

  3.  

    •     no deduction is allowed to a resident of any territory outside the UK in respect of the distribution

The last two conditions are identical to the corresponding conditions that apply to small companies and so for further details see D5.151.

Distribution exemption for companies that are not smallFurther

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