Income and Corporation Taxes Act 1988

[F113AA Corporation tax starting rate.U.K.

(1)Where in any accounting period the profits of a qualifying company do not exceed the first relevant amount, the company may, instead of making a claim under section 13(1), claim that the corporation tax charged on its basic profits for that period shall be calculated as if the rate of corporation tax were such rate (to be known as the “corporation tax starting rate”), lower than the small companies’ rate, as Parliament may from time to time determine.

(2)Where in any accounting period the profits of a qualifying company exceed the first relevant amount but do not exceed the second relevant amount, the company may, instead of making a claim under section 13(1), claim that the corporation tax charged on its basic profits for that period shall be—

(a)calculated as if the rate of corporation tax were the small companies’ rate; and

(b)then reduced by the sum specified in subsection (3) below.

(3)That sum is the sum equal to such fraction as Parliament may from time to time determine of the following amount—

where—

  • R2 is the second relevant amount;

  • P is the amount of the profits; and

  • I is the amount of the basic profits.

(4)The first and second relevant amounts mentioned above shall be determined as follows—

(a)where the company has no associated company in the accounting period, those amounts are £10,000 and £50,000 respectively;

(b)where the company has one or more associated companies in the accounting period—

(i)the first relevant amount is £10,000 divided by one plus the number of those associated companies, and

(ii)the second relevant amount is £50,000 divided by one plus the number of those associated companies.

(5)Subsections (4) and (5) of section 13 shall apply for the purposes of subsection (4) above as they apply for the purposes of subsection (3) of that section.

(6)For an accounting period of less than 12 months the relevant amounts determined in accordance with subsection (4) above shall be proportionately reduced.

(7)The profits and the basic profits of a company for an accounting period shall be determined for the purposes of this section as they are for the purposes of section 13.

(8)In this section “qualifying company”, in relation to an accounting period, means a company which—

(a)is resident in the United Kingdom;

(b)is not a close investment-holding company (as defined in section 13A) at the end of that period; and

(c)is not an investment trust which for that period has any eligible rental income (within the meaning of section 508A).]

Textual Amendments

F1S. 13AA inserted (with effect in accordance with s. 28(6)(7) of the amending Act) by Finance Act 1999 (c. 16), s. 28(1)

Modifications etc. (not altering text)

C1S. 13AA modified (27.7.1999) by Finance Act 1999 (c. 16), s. 28(7)(a)