Finance Act 2021

Rate of diverted profits tax

8 Increase in the rate of diverted profits tax

(1) In section 79 of FA 2015 (charge to diverted profits tax)—

(a) in subsection (2)(a) (which sets the rate in a standard case), and

(b) in subsections (3) and (3A) (which contain modifications of the rate in the case of ring fence profits or banking surcharge profits),

for “25%” substitute “31%”.

(2) The amendments made by this section have effect for accounting periods beginning on or after 1 April 2023.

(3) The remaining provisions of this section deal with a case where a company has an accounting period (a “straddling period”) beginning before 1 April 2023 and ending on or after that date.

(4) For the purpose of calculating the amount of diverted profits tax chargeable on a company for the straddling period—

(a) so much of the straddling period as falls before 1 April 2023, and

(b) so much of it as falls on or after that date,

are to be treated as separate accounting periods.

(5) If it is necessary to apportion an amount for the straddling period to the two separate accounting periods, the apportionment is to be made on a time basis according to the respective lengths of the separate accounting periods.