Income Tax (Trading and Other Income) Act 2005 Explanatory Notes

Section 20(1)paragraph 2 of ICTA – the income chargeable

3368.Section 20(1) paragraph 2 of ICTA determines the income chargeable and is expressed to apply for “all purposes of the Tax Acts”. It therefore applies directly to a company subject to corporation tax unless there is an express provision to the contrary.

3369.Section 20(1) paragraph 2 of ICTA is expressly disapplied in the case of:

  • dealers;

  • Lloyd’s underwriters; and

  • certain life assurance companies.

3370.Where section 20(1) paragraph 2 of ICTA might otherwise be relevant, that is, in order to establish that income is the aggregate of the dividend etc and the tax credit (for example, under section 13 of ICTA (small companies’ relief), in connection with the surplus ACT rules etc), the relevant legislation uses the term “franked investment income”. Franked investment income is defined in almost identical terms as section 20(1) paragraph 2 of ICTA.

3371.Section 20(1) paragraph 2 of ICTA therefore serves no practical purpose in a corporation tax context.

Back to top