Part 8Oil activities
F1CHAPTER 3ARates at which corporation tax is charged on ring fence profits
The rates
279ACorporation tax rates on ring fence profits
1
Corporation tax is charged on ring fence profits at the main ring fence profits rate.
2
But subsection (3) provides for tax to be charged at the small ring fence profits rate instead of the main ring fence profits rate in certain circumstances.
3
Corporation tax is charged at the small ring fence profits rate on a company's ring fence profits of an accounting period if—
a
the company is UK resident in the accounting period,
F5ab
it is not a close investment-holding company in the period, and
b
its augmented profits of the accounting period do not exceed the lower limit.
4
In this Act—
“the main ring fence profits rate” means 30%, and
“the small ring fence profits rate” means 19%.
Marginal relief
279BCompany with only ring fence profits
1
This section applies if—
a
a company is UK resident in an accounting period,
F6ab
it is not a close investment-holding company in the period,
b
its augmented profits of the accounting period—
i
exceed the lower limit, but
ii
do not exceed the upper limit, and
c
its augmented profits of that period consist exclusively of ring fence profits.
2
The corporation tax charged on the company's taxable total profits of the accounting period is reduced by an amount equal to—
where—
R is the F7ring fence marginal relief fraction,
U is the upper limit,
A is the amount of the augmented profits, and
N is the amount of the taxable total profits.
3
In this Chapter “the F8ring fence marginal relief fraction” means 11/400ths.
279CCompany with ring fence profits and other profits
1
This section applies if—
a
a company is UK resident in an accounting period,
F9ab
it is not a close investment-holding company in the period,
b
its augmented profits of the accounting period—
i
exceed the lower limit, but
ii
do not exceed the upper limit, and
c
its augmented profits of that period consist of both ring fence profits and other profits.
F102
The corporation tax charged on the company's taxable total profits of the accounting period is reduced by the total of—
a
the sum equal to the ring fence marginal relief fraction of the ring fence amount, and
b
the sum equal to the standard marginal relief fraction of the remaining amount.
279DThe ring fence amount
1
In section 279C “the ring fence amount” means the amount given by the formula—
2
In this section—
UR is the amount given by multiplying the upper limit by—
AR is the total amount of any ring fence profits that form part of the augmented profits of the accounting period,
NR is the total amount of any ring fence profits that form part of the taxable total profits of the accounting period, and
A is the amount of the augmented profits of the accounting period.
279DAF2The remaining amount
1
In section 279C “the remaining amount” means the amount given by the formula—
2
In this section—
UZ is the amount given by multiplying the upper limit by—
AZ is the total amount of any profits other than ring fence profits that form part of the augmented profits of the accounting period,
NZ is the total amount of any profits other than ring fence profits that form part of the taxable total profits of the accounting period, and
A is the amount of the augmented profits of the accounting period.
The lower limit and the upper limit
279EThe lower limit and the upper limit
1
This section gives the meaning in this Chapter of “the lower limit” and “the upper limit” in relation to an accounting period of a company (“A”).
2
F11If A has no associated company in the accounting period—
a
the lower limit is F12£50,000, and
b
the upper limit is F13£250,000.
3
F14If A has one or more associated companies in the accounting period—
a
the lower limit is—F15
and
b
the upper limit is—F16
where N is the number of those related 51% group companies.
4
For an accounting period of less than 12 months the lower limit and the upper limit are proportionately reduced.
F3Supplementary
S. 279EA and cross-heading inserted (with effect in accordance with Sch. 1 para. 34 of the amending Act) by Finance Act 2021 (c. 26), Sch. 1 para. 10
279EAInterpretation etc
1
The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of section 279E.
2
Section 18K (power to obtain information) applies for the purposes of this Part as it applies for the purposes of Part 3A.
3
For the purposes of this Chapter—
“augmented profits” has the same meaning as in Part 3A (see sections 18L and 18M), and
“close investment-holding company” has the same meaning as in that Part (see section 18N).
Augmented profits
F4279G“Augmented profits”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F4279HInterpretation of section 279G(3) and (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pt. 8 Ch. 3A inserted (with effect in accordance with Sch. 1 para. 22 of the amending Act) by Finance Act 2014 (c. 26), Sch. 1 para. 5(3)