Commentary

D7.903 Supplementary charge in respect of ring fence trades

Corporate tax
Corporate tax | Commentary

D7.903 Supplementary charge in respect of ring fence trades

Corporate tax | Commentary

D7.903 Supplementary charge in respect of ring fence trades

A supplementary tax charge applies to 'adjusted' ring fence profits in addition to normal corporation tax. For accounting periods commencing on or after 1 January 2016 the supplementary charge is 10%1. (The rate was 20% from 1 January 2015 to 31 December 2015 and 32% from 24 March 2011 to 31 December 2014). Where any accounting period straddles 1 January 2016, the profits are to be apportioned on a time basis2.

Adjusted ring fence profits

A company's 'adjusted ring fence profits' are all its profits that arise to it from carrying on a ring fence trade (ie all its profits chargeable to corporation tax by reference to its chargeable gains and other income, in addition to the trading profits arising to the company as a result of its ring fence trade) except that the following adjustments need to be made for financing costs and decommissioning expenditure3.

Financing costs

No deduction is given for financing costs in computing ring fence profits or losses (including any group losses surrendered to the company)4.

Financing costs are defined as the costs of debt finance, which

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