Commentary

D5.160 Outline of calculation and utilisation of surplus ACT

Corporate tax
Corporate tax | Commentary

D5.160 Outline of calculation and utilisation of surplus ACT

Corporate tax | Commentary

Surplus and shadow ACT

D5.160 Outline of calculation and utilisation of surplus ACT

Background to advance corporation tax regime

Broadly, the advance corporation tax regime which existed prior to 5 April 1999, required companies making qualifying distributions to make quarterly payments on account of corporation tax (advance corporation tax (ACT)) at a rate of 25% of the gross amount of the distribution1. If the recipient was a UK resident company it would receive franked investment income (FII) which was the amount of the distribution plus the amount of the tax credit which was, in the case of distributions made before 6 April 1999, equal to that proportion of the amount or value of the distribution as corresponded to the ACT rate for the year in which the distribution was made.

There were then several ways in which the paying company could set off the ACT which it had paid which were as

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