Corporation Tax Act 2009 (c. 4)

Part 2 U.K. Charge to corporation tax: basic provisions

Chapter 1 U.K. The charge to corporation tax

Charge to tax on profits U.K.

2 Charge to corporation tax U.K.

(1) Corporation tax is charged on profits of companies for any financial year for which an Act so provides.

(2) In this Part “profits” means income and chargeable gains, except in so far as the context otherwise requires.

F1 (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In this Act “the charge to corporation tax on income” means the charge under subsection (1) so far as relating to income.

(4) The charge to corporation tax on income has effect in accordance with the provisions of the Corporation Tax Acts that deal with its application.

Textual Amendments

F1 S. 2(2A) omitted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 1 para. 109

3 Exclusion of charge to income tax U.K.

(1) The provisions of the Income Tax Acts relating to the charge to income tax do not apply to income of a company if—

(a) the company is UK resident, or

[F2 (b) the company is not UK resident [F3 and it is chargeable to corporation tax in respect of the income, or would be so chargeable but for an exemption].]

(2) Subsection (1) does not apply to income accruing to a company in a fiduciary or representative capacity.

Textual Amendments

F2 S. 3(1)(b) substituted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 76(6) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2))

F3 Words in s. 3(1)(b) substituted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 11, 35 (with Sch. 5 para. 36)

4 Exclusion of charge to capital gains tax U.K.

Capital gains tax is not charged on gains accruing to a company in respect of which the company is chargeable to corporation tax, or would be so chargeable but for an exemption.

General scheme of corporation tax U.K.

5 Territorial scope of charge U.K.

(1) A UK resident company is [F4 chargeable to corporation tax on income] on all its profits wherever arising [F5 (but see Chapter 3A for an exemption from charge in respect of profits of foreign permanent establishments)].

[F6 (2) A non-UK resident company is [F7 within the charge to corporation tax on income] only if—

(a) it carries on a trade of dealing in or developing UK land (see section 5B), F8 ...

(b) it carries on a trade in the United Kingdom (other than a trade of dealing in or developing UK land) through a permanent establishment in the United Kingdom[F9 ,

(c) it carries on a UK property business, or

(d) it has other UK property income.]]

[F10 (2A) A non-UK resident company which carries on a trade of dealing in or developing UK land is [F11 chargeable to corporation tax on income] on all its profits wherever arising that are profits of that trade.]

(3) A non-UK resident company which carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom is [F12 chargeable to corporation tax on income] on all its profits wherever arising that are chargeable profits as defined in section 19 (profits attributable to its permanent establishment in the United Kingdom).

[F13 (3A) A non-UK resident company which carries on a UK property business is chargeable to corporation tax on income on all its profits that are—

(a) profits of that business, or

(b) profits arising from loan relationships or derivative contracts that the company is a party to for the purposes of that business.

(3B) A non-UK resident company which has other UK property income is chargeable to corporation tax on income on all its profits that—

(a) consist of that income, or

(b) are profits arising from loan relationships or derivative contracts that the company is a party to for the purposes of enabling it to generate that income.]

(4) Subsections (1) [F14 and (2A) to (3B)] are subject to any exceptions provided for by the Corporation Tax Acts.

[F15 (5) The territorial scope of the charge to corporation tax on chargeable gains is given by section 2B of TCGA 1992.]

[F16 (6) In this Part “other UK property income” means income dealt with by any of the following Chapters of Part 4—

(a) Chapter 7 (rent receivable in connection with a UK section 39(4) concern);

(b) Chapter 8 (rent receivable for UK electric-line wayleaves);

(c) Chapter 9 (post-cessation receipts arising from a UK property business).]

Textual Amendments

F4 Words in s. 5(1) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 110(2)

F5 Words in s. 5(1) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 para. 3, 31

F6 S. 5(2) substituted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 76(2) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2))

F7 Words in s. 5(2) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 110(3)

F8 Word in s. 5(2)(a) omitted (6.4.2020) by virtue of Finance Act 2019 (c. 1), Sch. 5 paras. 2(a), 35 (with Sch. 5 para. 36)

F9 S. 5(2)(c)(d) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 2(b), 35 (with Sch. 5 para. 36)

F10 S. 5(2A) inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 76(3) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2))

F11 Words in s. 5(2A) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 110(2)

F12 Words in s. 5(3) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 110(2)

F13 S. 5(3A)(3B) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 para. 3, 35 (with Sch. 5 para. 36)

F14 Words in s. 5(4) substituted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 4, 35 (with Sch. 5 para. 36)

F15 S. 5(5) inserted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 110(4)

F16 S. 5(6) inserted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 5, 35 (with Sch. 5 para. 36)

[F17 5A Arrangements for avoiding tax U.K.

(1) Subsection (3) applies if a company has entered into an arrangement the main purpose or one of the main purposes of which is to obtain a relevant tax advantage for the company.

(2) In subsection (1) the reference to obtaining a relevant tax advantage includes obtaining a relevant tax advantage by virtue of any provisions of double taxation arrangements, but only in a case where the relevant tax advantage is contrary to the object and purpose of the provisions of the double taxation arrangements (and subsection (3) has effect accordingly, regardless of section 6(1) of TIOPA 2010).

(3) The relevant tax advantage is to be counteracted by means of adjustments.

(4) For this purpose adjustments may be made (whether by an officer of Revenue and Customs or by the company) by way of an assessment, the modification of an assessment, amendment or disallowance of a claim, or otherwise.

(5) In this section “relevant tax advantage” means a tax advantage in relation to corporation tax to which the company is chargeable (or would without the tax advantage be chargeable) by virtue of section 5(2A).

(6) In this section—

• “arrangement” (except in the phrase “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable;

• “double taxation arrangements” means arrangements which have effect under section 2(1) of TIOPA 2010 (double taxation relief by agreement with territories outside the United Kingdom);

• “tax advantage” has the meaning given by section 1139 of CTA 2010.

Textual Amendments

F17 Ss. 5A, 5B inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 76(5) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2))

5B Trade of dealing in or developing UK land U.K.

(1) A non-UK resident company's “trade of dealing in or developing UK land” consists of —

(a) any activities falling within subsection (2) which it carries on, and

(b) any activities from which profits, gains or losses arise which are treated under Part 8ZB of CTA 2010 as profits or losses of the company's trade of dealing in or developing UK land.

(2) The activities within this subsection are—

(a) dealing in UK land;

(b) developing UK land for the purpose of disposing of it.

(3) In this section “land” includes—

(a) buildings and structures,

(b) any estate, interest or right in or over land, and

(c) land under the sea or otherwise covered by water.

(4) In this section—

• “disposal” is to be interpreted in accordance with section 356OQ of CTA 2010;

• “UK land” means land in the United Kingdom.]

Textual Amendments

F17 Ss. 5A, 5B inserted (with effect in accordance with s. 81 of the amending Act) by Finance Act 2016 (c. 24), s. 76(5) (and also with effect in accordance with Finance (No. 2) Act 2017 (c. 32), s. 39(1)(2))

6 Profits accruing in fiduciary or representative capacity U.K.

(1) A company is not chargeable to corporation tax on profits which accrue to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in the profits.

(2) The exception under subsection (1) from chargeability does not apply to profits arising in the winding up of the company.

7 Profits accruing under trusts U.K.

Profits that accrue for the benefit of a company under a trust are treated for the purposes of the charge to corporation tax under section 2(1) as accruing directly to the company.

8 How tax is charged and assessed U.K.

(1) Corporation tax for a financial year is charged on profits arising in the year.

(2) Corporation tax is calculated and chargeable, and assessments to corporation tax are made, by reference to accounting periods.

(3) Corporation tax which is assessed and charged for an accounting period of a company is assessed and charged on the full amount of profits arising in the accounting period.

(4) Subsection (3) is subject to any contrary provision in the Corporation Tax Acts.

(5) If a company's accounting period falls within more than one financial year, the amount of the profits arising in the accounting period that is chargeable to corporation tax must be apportioned between the financial years in which the accounting period falls.