Finance Act 2000

Restriction of relief for underlying tax E+W+S+N.I.

8 (1) Amend section 799 of the Taxes Act 1988 (computation of underlying tax) as follows. E+W+S+N.I.

(2) In subsection (1) (underlying tax to be taken into account to be so much of the foreign tax on the relevant profits as is attributable to the proportion represented by the dividend) after “as" insert “ (a) ” and at the end of the subsection add “, and

(b) does not exceed the amount calculated by applying the formula set out in subsection (1A) below.”

(3) After subsection (1) insert—

“(1A) The formula is—

where—

D is the amount of the dividend; and

M is the maximum relievable rate;

and for the purposes of this subsection the maximum relievable rate is the rate of corporation tax in force when the dividend was paid.”

(4) In subsection (3) (profits by reference to which underlying tax to be taken into account is calculated)—

(a) at the end of paragraph (a) insert “ and ”;

(b) omit paragraph (b); and

(c) in paragraph (c), for “paid neither for a specified period nor out of specified profits" substitute “ not paid for a specified period ”.

(5) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.

(6) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.