INTM167080 | UK residents with foreign income or gains: corporation tax: Accounting periods ending on or after 3 June 1986 and on or before 5 April 1999; accounting periods beginning on or after 6 April 1999

Accounting periods ending on or after 3 June 1986 and on or before 5 April 1999

Stage 1

Calculate the Corporation Tax (before any set-off of Advance Corporation Tax (‘ACT’) or any credit for foreign tax) on the company’s total profits for the accounting period in which the income or chargeable gain arises (the relevant accounting period).

Stage 2

Apportion the tax calculated as in Stage 1 above by applying to the amount of the income or gains from each source the rate of Corporation Tax payable by the company on its income or chargeable gains for that period. The rate will be the general Corporation Tax rate for the period or, where appropriate, the small companies’ rate or the `marginal rate’.

Stage 3

Deduct from the Corporation Tax charged on each item of doubly taxed income the lesser of the foreign tax and the Corporation Tax attributable to that income. See CTM20110.

Stage 4

Deduct from the net Corporation Tax for each item of income the appropriate amount of Advance Corporation Tax (if any) attributable to each item (see INTM167110).

Accounting periods beginning on or after 6 April 1999

The requirement for UK resident companies to account for and pay ACT was abolished for distributions made on or after 6 April 1999. Relief for any amount of unrelieved surplus ACT (‘USACT’) at 6 April 1999 or a company, or of a company in the same group, is subject to the shadow ACT regulations of SI1999/358.

The principles with respect to DTR and ACT in step 4 will, nevertheless, apply to any amount of USACT which is utilised in accordance with the shadow ACT regulations for accounting periods beginning on or after 6 April 1999. See CTM18670 as regards the interaction of USACT and DTR.