Finance (No. 3) Act 2010

Distributions subject to the charge to corporation tax on income

3 (1) Part 9A of CTA 2009 (company distributions) is amended as follows.

(2) In section 931A (charge to tax), omit subsection (2) and for subsection (3) substitute—

“(3) A distribution is exempt for the purposes of this Part if it is exempt under—

(a) Chapter 2 (distributions received by small companies), or

(b) Chapter 3 (distributions received by companies that are not small).”

(3) In section 931H (dividends derived from transactions not designed to reduce tax)—

(a) in the heading, for “Dividends” substitute “Distributions”,

(b) in subsection (1)—

(i) after “dividend” insert “or other distribution”, and

(ii) for “paid” substitute “made”,

(c) in subsection (2), for “dividend is paid” substitute “distribution is made”,

(d) in subsections (3) and (4)—

(i) for “dividend” substitute “distribution”, and

(ii) for “paid” substitute “made”, and

(e) in subsection (5)—

(i) for “dividend” substitute “distribution”,

(ii) for “paid” (in both places) substitute “made”, and

(iii) for “dividends” substitute “distributions”.

(4) After section 931R insert—

“Chargeable gains

931RA Chargeable gains

The fact that a dividend or other distribution is exempt does not prevent it from being taken into account in the calculation of chargeable gains.”