Corporation Tax Act 2009

Part 19 General exemptions

Profits from FOTRA securities

1279 Exemption of profits from securities free of tax to residents abroad (“FOTRA securities”)

(1) No liability to corporation tax arises in respect of profits from a FOTRA security or a loan relationship represented by such a security if conditions A and B are met.

(2) Subsection (1) is subject to subsection (5).

(3) Condition A is that the profits are stated in the exemption condition to be exempt from corporation tax.

(4) Condition B is that any requirements for obtaining the exemption imposed by the security’s conditions of issue are met.

(5) This section does not affect the need to claim repayment of tax within the time limit applicable for a claim.

(6) Section 1280 applies for the interpretation of this section.

1280 Section 1279: supplementary provision

(1) In this section and section 1279 “FOTRA security” means—

(a) a security issued with a condition about exemption from taxation authorised by section 22 of F(No.2)A 1931,

(b) a gilt-edged security which was issued before 6th April 1998 and without any such condition (other than 3½% War Loan 1952 Or After), or

(c) 3½% War Loan 1952 Or After.

(2) In section 1279 “the exemption condition” has the meaning given by subsections (3) to (5), according to the kind of FOTRA security involved.

(3) In relation to a security within subsection (1)(a), it means the condition authorised by section 22 of F(No.2)A 1931.

(4) In relation to a security within subsection (1)(b), it means a condition with which 7.25% Treasury Stock 2007 was first issued, being a condition treated by section 161(1) of FA 1998 (non-FOTRA securities)—

(a) as a condition with which the security within subsection (1)(b) was issued, and

(b) as a condition authorised in relation to its issue by section 22 of F(No.2)A 1931.

(5) In relation to 3½% War Loan 1952 Or After, it means a condition of its issue authorised by section 47 of F(No.2)A 1915.

(6) In this section “gilt-edged security” means a security which—

(a) is a gilt-edged security for the purposes of TCGA 1992 (see Schedule 9 to that Act), or

(b) will be such a security on the making of an order under paragraph 1 of Schedule 9 to that Act if the making of the order is anticipated in the prospectus under which the security is issued.

Income from savings certificates

1281 Income from savings certificates

(1) No liability to corporation tax arises in respect of income from authorised savings certificates.

(2) A savings certificate is authorised so far as its acquisition was not prohibited by regulations made by the Treasury limiting a person’s holding.

(3) In this section “savings certificates” means—

(a) savings certificates issued under—

(i) section 12 of the National Loans Act 1968 (c. 13) (power of Treasury to borrow),

(ii) section 7 of the National Debt Act 1958 (c. 6) (power of Treasury to issue national savings certificates), or

(iii) section 59 of FA 1920 (power to borrow on national savings certificates),

(b) war savings certificates, as defined in section 9(3) of the National Debt Act 1972 (c. 65), or

(c) savings certificates issued under any enactment forming part of the law of Northern Ireland and corresponding to section 12 of the National Loans Act 1968.

(4) But subsection (3)(c) does not include Ulster Savings Certificates (for which there are special rules in section 1282).

1282 Income from Ulster Savings Certificates

(1) No liability to corporation tax arises in respect of income from authorised Ulster Savings Certificates if condition A or B is met.

(2) Condition A is that —

(a) the holder purchased them, and

(b) at the time of the purchase the holder was resident in Northern Ireland.

(3) Condition B is that the holder is so resident when they are repaid.

(4) An Ulster Savings Certificate is authorised so far as its acquisition was not prohibited by regulations made by the Department of Finance and Personnel limiting a person’s holding.

(5) The exemption under this section requires a claim.

(6) In this Part “Ulster Savings Certificates” means savings certificates issued or treated as issued under section 15 of the Exchequer and Financial Provisions Act (Northern Ireland) 1950 (c. 3 (N.I.)).

Miscellaneous

1283 Interest from tax reserve certificates

No liability to corporation tax arises in respect of interest from tax reserve certificates issued by the Treasury.

1284 Housing grants

(1) No liability to corporation tax arises in respect of a payment if it is made—

(a) under an enactment relating to the giving of financial assistance for the provision, maintenance or improvement of housing accommodation or other residential accommodation, and

(b) by way of grant or other contribution towards expenses.

(2) It does not matter whether—

(a) the payment is made to the person who incurs the expenses, or

(b) the expenses have been, or are to be, incurred.

(3) Subsection (1) does not apply so far as the payment is made towards an expense which is deductible in calculating income for any corporation or income tax purpose.

1285 UK company distributions

(1) Corporation tax is not chargeable on dividends or other distributions of a UK resident company.

(2) Dividends and other distributions of a UK resident company are not taken into account as receipts in any calculation of income for corporation tax purposes.

(3) Subsection (1) does not prevent any dividends or other distributions from being taken into account in the calculation of chargeable gains.

(4) Subsections (1) and (2) are subject to any exceptions made in the Corporation Tax Acts.

(5) For exceptions see in particular—

(a) section 130 (traders receiving distributions etc), and

(b) section 219(4) and (4A) of FA 1994 (Lloyd’s underwriters: taxation of profits).

1286 VAT repayment supplements

No liability to corporation tax arises in respect of a sum paid by way of supplement under section 79 of VATA 1994 (VAT repayment supplements).

1287 Incentives to use electronic communications

No liability to corporation tax arises in respect of anything received by way of incentive under any regulations made in accordance with Schedule 38 to FA 2000 (regulations for providing incentives for electronic communications).