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INTM167350 | UK residents with foreign income or gains: corporation tax: ACT and charges: examples (ACT abolished for accounting periods ending after 5 April 1999)

From HM Revenue & Customs · International Manual

Example 1 - Allocation of ACT

Accounting period to 31 March 1999

-	UK	For. 1	For. 2	For. 3	For. 4	Total
-	£’000	£’000	£’000	£’000	£’000	£’000
Income (after set-offs under ICTA88/S797(3))	400	100 (FT nil)	200 (FT 40%)	200 (FT 15%)	100 (FT 5%)	1,000
CT @ 31%	124	31	62	62	31	310
DTR (Credit)	-	-	(62) (limit)	(30) (all)	(5) (all)	(97)
CT after DTR	124	31	-	32	26	213
ACT (Max 20% of income - Available 200)	(80) (S239(2) limit)	(20) (S239(2) limit)	-	(32) (lower limit)	(20) (S239(2) limit	(152)
Mainstream CT	44	11	-	-	6	61

Example 2 - Foreign branch/allocation of charges/allocation of ACT

Accounting period to 31 March 1999

-	£
Trading profits (of which £100,000 from foreign branch have borne foreign tax of £40,000)	300,000
Interest income	100,000
Charges	50,000
ACT	90,000
Computation:	-
Case I	300,000
Case III	100,000
-	400,000
Charges	(50,000)
Charged to CT	350,000
CT on profits of £350,000 @ 31%	108,500
DTR (restricted to CT on branch profits)	(31,000)
CT subject to ACT set-off	77,500
ACT (see below)	(50,000)
Net CT due	27,500

Computation of ACT restriction under ICTA88/S797

-	Case I (Foreign Branch)	Case I (Domestic Component)	Case III	Total
-	£	£	£	£
Profits	100,000	200,000	100,000	400,000
Charges	-	-	(50,000)	(50,000)
-	100,000	200,000	50,000	350,000
CT @ 31%	31,000	62,000	15,500	108,500
DTR	(31,000)	-	-	(31,000)
CT subject to ACT	-	62,000	15,500	77,500
ACT set-off	-	(40,000) (a)	(10,000) (b)	(50,000)
Net CT	-	22,000	5,500	27,500

CT limit 200,000 @ 20% = 40,000
ACT limit 50,000 @ 20% = 10,000