PART I THE CHARGE TO TAX
Small companies’ rate
13 Small companies’ relief.
(1)
M1Where in any accounting period the profits of F1a company which—
(a)
is resident in the United Kingdom, and
(b)
is not a close investment-holding company (as defined in section 13A) at the end of that period.
do not exceed the lower relevant maximum amount, the company may claim that the corporation tax charged on its basic profits for that period shall be calculated as if the rate of corporation tax (instead of being the rate fixed for companies generally) were such lower rate (to be known as the “small companies’ rate”) as Parliament may from time to time determine.
(2)
Where in any accounting period the profits of any such company exceed the lower relevant maximum amount but do not exceed the upper relevant maximum amount, the company may claim that the corporation tax charged on its basic profits for that period shall be reduced by a sum equal to such fraction as Parliament may from time to time determine of the following amount—
where—
M is the upper relevant maximum amount;
P is the amount of the profits; and
I is the amount of the basic profits.
(3)
The lower and upper relevant maximum amounts mentioned above shall be determined as follows—
(a)
(b)
where the company has one or more associated companies in the accounting period, the lower relevant maximum amount is F2£300,000 divided by one plus the number of those associated companies, and the upper relevant maximum amount is F3£1,500,000 divided by one plus the number of those associated companies.
(4)
In applying subsection (3) above to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded and for the purposes of this section a company is to be treated as an “associated company” of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.
In this subsection “control” shall be construed in accordance with section 416.
(5)
In determining how many associated companies a company has got in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.
(6)
For an accounting period of less than 12 months the relevant maximum amounts determined in accordance with subsection (3) above shall be proportionately reduced.
(7)
For the purposes of this section the profits (but not the basic profits) of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income F4 other than franked investment income (if any) which the company (“the receiving company") receives from a company resident in the United Kingdom which is—
(a)
a 51 per cent. subsidiary of the receiving company or of a company resident in the United Kingdom of which the receiving company is a 51 per cent. subsidiary; or
(b)
a trading or holding company which does not fall within section 247(1A) and which is owned by a consortium the members of which include the receiving company.
which the company (if a member of a group) receives from companies within the group F5and with the addition of F6. . . arising to the company ; and for this purpose distributions received by the company from another are to be treated as coming from within the company’s group if, but only if, dividends so received are group income or would be group income if the companies so elected.
(8)
For the purposes of this section the basic profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne.
F7(8AA)
Subsections (8) to (9A) of section 247 shall apply for the purposes of subsection (7) above as they apply for the purposes of that section.
(8AB)
The reference in subsection (7) above to franked investment income received by a company applies to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.
F8(8A)
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .