Finance Act 2021

Section 7

SCHEDULE 1 U.K. Small profits rate for non-ring fence profits

PART 1 U.K. Small profits rate

1 U.K. CTA 2010 is amended as follows.

2 U.K. In section 3 (corporation tax rates), for subsection (2) substitute—

“(2) Subsection (1) is subject to—

(a) section 18A (which provides for tax to be charged at the standard small profits rate instead of the main rate in certain cases), and

(b) any other provision of the Corporation Tax Acts which provides for corporation tax to be charged at a different rate.”

3 U.K. Before Part 4 insert the following as a new Part 3A—

“PART 3A U.K. Companies with small profits

The standard small profits rate for non-ring fence profits U.K.

18A Profits charged at the standard small profits rate

(1) Corporation tax is charged at the standard small profits rate on a company's taxable total profits of an accounting period which are not ring fence profits if—

(a) the company is UK resident in the accounting period,

(b) it is not a close investment-holding company in the period, and

(c) its augmented profits of the accounting period do not exceed the lower limit.

(2) In this Act “the standard small profits rate” means a rate that—

(a) is lower than the main rate, and

(b) is set by Parliament for the financial year as the standard small profits rate.

(3) In this Part “ring fence profits” has the same meaning as in Part 8 (see section 276).

(4) In the case of a company with ring fence profits, see section 279A(3) (small ring fence profits rate chargeable on ring fence profits).

Marginal relief U.K.

18B Marginal relief for companies without ring fence profits

(1) This section applies if—

(a) a company is UK resident in an accounting period,

(b) it is not a close investment-holding company in the period,

(c) its augmented profits of the accounting period exceed the lower limit but do not exceed the upper limit, and

(d) its augmented profits of the accounting period do not include any 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—

F is the standard 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 Act “the standard marginal relief fraction” means the fraction set by Parliament for the financial year as the standard marginal relief fraction for the purposes of this Part.

18C Marginal relief for companies with ring fence profits

In the case of a company with ring fence profits—

(a) see section 279B (if the company's augmented profits of an accounting period consist exclusively of ring fence profits), and

(b) see section 279C (if the company's augmented profits of an accounting period consist of both ring fence profits and other profits).

The lower limit and the upper limit U.K.

18D The lower limit and the upper limit

(1) This section gives the meaning in this Part of “the lower limit” and “the upper limit” in relation to an accounting period of a company (“C”).

(2) If C has no associated company in the accounting period—

(a) the lower limit is £50,000, and

(b) the upper limit is £250,000.

(3) If C has one or more associated companies in the accounting period—

(a) the lower limit is—

(b) the upper limit is—

where N is the number of those associated companies.

(4) For an accounting period of less than 12 months the lower limit and the upper limit are proportionately reduced.

18E Associated companies

(1) For the purposes of section 18D, a company is another company's associated company in an accounting period if it is an associated company (see subsection (4)) for any part of the accounting period.

(2) The rule in subsection (1) applies to each of two or more associated companies even if they are associated companies for different parts of the accounting period.

(3) But an associated company is ignored for the purposes of section 18D if—

(a) it has not carried on a trade or business at any time in the accounting period, or

(b) it was an associated company for part only of the accounting period and has not carried on a trade or business at any time in that part of the accounting period.

(4) For the purposes of this Part, a company is an associated company of another at any time when—

(a) one of the two has control of the other, or

(b) both are under the control of the same person or persons.

(5) In subsection (4) “control” has the same meaning as in Part 10 (see sections 450 and 451).

(6) In this section—

(a) subsection (3) is subject to section 18F, and

(b) subsections (4) and (5) are subject to sections 18G to 18J.

18F Section 18E(3): treatment of certain non-trading companies

(1) Subsection (2) applies if a company carries on a business of making investments in an accounting period and throughout the period the company—

(a) carries on no trade,

(b) has one or more 51% subsidiaries, and

(c) is a passive company.

(2) The company is treated for the purposes of section 18E(3) as not carrying on a business at any time in the accounting period.

(3) A company is a passive company throughout an accounting period only if the following requirements are met—

(a) it has no assets in that period, other than shares in companies which are its 51% subsidiaries,

(b) no income arises to it in that period other than dividends,

(c) if income arises to it in that period in the form of dividends—

(i) the redistribution condition is met (see subsection (4)), and

(ii) the dividends are exempt distributions of a qualifying kind received by it (see subsection (5)),

(d) no chargeable gains accrue to it in that period,

(e) no expenses of management of the business mentioned in subsection (1) are referable to that period, and

(f) no qualifying charitable donations are deductible from the company's total profits of that period.

(4) The redistribution condition is that—

(a) the company pays dividends to one or more of its shareholders in the accounting period, and

(b) the total amount paid in the form of those dividends is at least equal to the amount of the income arising to the company in the form of dividends in that period.

(5) For the purposes of this section a distribution is an “exempt distribution of a qualifying kind” if—

(a) it is a distribution for the purposes of the Corporation Tax Acts because (and only because) it falls within paragraph A, B, G or H in section 1000(1), and

(b) it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

(6) If income arises to a company in an accounting period in the form of a dividend and the requirement in subsection (3)(c) is met in respect of the income—

(a) neither the dividend nor any asset representing it is treated as an asset of the company in that accounting period for the purposes of subsection (3)(a), and

(b) no right of the company to receive the dividend is treated as an asset of the company for the purposes of subsection (3)(a) in that period or any earlier accounting period.

18G Attribution to persons of rights and powers of their partners

(1) This section applies if—

(a) it is necessary to determine in accordance with section 18E(4) and (5) whether a company is an associated company of another company, and

(b) the relationship between the two companies is not one of substantial commercial interdependence.

(2) In the application of section 451 (meaning of “control”: rights to be attributed) for the purposes of the determination, any person to whom rights and duties fall to be attributed under subsections (4) and (5) of that section is to be treated, for the purposes of those subsections, as having no associates.

(3) The Treasury may by regulations prescribe factors that are to be taken into account in determining whether a relationship between two companies amounts to substantial commercial interdependence for the purposes of this section.

18H Associated companies: fixed-rate preference shares

(1) In determining for the purposes of section 18E(4) whether a company is under the control of another, fixed-rate preference shares held by a company are ignored if the company holding them—

(a) is not a close company,

(b) takes no part in the management or conduct of the company which issued the shares, or in the management or conduct of its business, and

(c) subscribed for the shares in the ordinary course of a business which includes the provision of finance.

(2) In this section “fixed-rate preference shares” means shares which—

(a) were issued wholly for new consideration,

(b) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and

(c) do not carry any right to dividends other than dividends which—

(i) are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and

(ii) together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued.

(3) In subsection (2)(a) “new consideration” has the meaning given by section 1115.

18I Association through a loan creditor

(1) A company (“A”) is not under the control of another company (“B”) for the purposes of section 18E(4) if—

(a) B is a loan creditor of A,

(b) there is no other connection between A and B, and

(c) either—

(i) B is not a close company, or

(ii) B's relationship to A as a loan creditor arose in the ordinary course of a business which B carries on.

(2) Subsection (3) applies if—

(a) two companies (“A” and “B”) are controlled by the same person who is a loan creditor of each of them,

(b) there is no other connection between A and B, and

(c) either—

(i) the loan creditor is a company which is not a close company, or

(ii) the loan creditor's relationship to each of A and B as a loan creditor arose in the ordinary course of a business which the loan creditor carries on.

(3) In determining for the purposes of this Part whether A and B are associated with each other, rights which the loan creditor has as a loan creditor of A, or as a loan creditor of B, are ignored.

(4) In subsection (2)(a) “control” has the same meaning as in section 18E(4).

(5) In this section—

(a) “connection” includes a connection in the past as well as a connection in the present, and

(b) references to a connection between two companies include any dealings between them.

(6) In this section references to a loan creditor of a company are to be read in accordance with section 453.

18J Association through a trustee

(1) Subsection (2) applies if—

(a) two companies (“A” and “B”) are controlled by the same person by virtue of rights or powers (or both) held in trust by that person, and

(b) there is no other connection between A and B.

(2) In determining for the purposes of this Part whether A and B are associated with each other, the rights and powers mentioned in subsection (1)(a) are ignored.

(3) In subsection (1)—

(a) “control” has the same meaning as in section 18E(4),

(b) “connection” includes a connection in the past as well as a connection in the present, and

(c) the reference to a connection between A and B includes any dealings between them.

Supplementary U.K.

18K Power to obtain information

(1) This section applies if a company (“the issuing company”) appears to an officer of Revenue and Customs to be a close company.

(2) The officer may, for the purposes of this Part, by notice require the issuing company to provide the officer with—

(a) particulars of any bearer securities issued by the company,

(b) the names and addresses of the persons to whom the securities were issued, and

(c) details of the amounts issued to each person.

(3) The officer may, for the purposes of this Part, by notice require—

(a) any person to whom bearer securities were issued by the company, or

(b) any person to or through whom bearer securities issued by the company were subsequently sold or transferred,

to provide any further information that the officer reasonably requires with a view to enabling the officer to find out the names and addresses of the persons beneficially interested in the securities.

(4) In this section—

• “loan creditor” has the meaning given by section 453, and

• “securities” includes—

  (a)

  shares, stocks, bonds, debentures and debenture stock, and

  (b)

  any promissory note or other instrument evidencing indebtedness to a loan creditor of the company.

18L Meaning of “augmented profits”

(1) For the purposes of this Part a company's “augmented profits” of an accounting period are—

(a) the company's taxable total profits of that period, plus

(b) any exempt distributions of a qualifying kind received by the company (“R”) that are not excluded.

(2) For the purposes of this section a distribution is an “exempt distribution of a qualifying kind” if—

(a) it is a distribution for the purposes of the Corporation Tax Acts because (and only because) it falls within paragraph A, B, G or H in section 1000(1), and

(b) it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).

(3) For the purposes of this section a distribution which R receives from a company (“C”) is excluded if—

(a) C is a 51% subsidiary of R or of a company of which R is a 51% subsidiary, or

(b) C is a trading company or relevant holding company that is a quasi-subsidiary of R.

(4) Section 18M—

(a) makes further provision for determining whether a company is a 51% subsidiary of another for the purposes of subsection (3), and

(b) defines expressions used in that subsection.

18M Interpretation of section 18L(3)

(1) This section applies for the purposes of section 18L(3).

(2) In addition to meeting the requirements of section 1154(2), a company (“A”) is a 51% subsidiary of another company (“B”) only at times when—

(a) B would be beneficially entitled to more than 50% of any profits available for distribution to equity holders of A, and

(b) B would be beneficially entitled to more than 50% of any assets of A available for distribution to its equity holders on a winding up.

(3) In determining whether or not a company is a 51% subsidiary of another company (“C”), C is treated as not owning share capital if—

(a) it owns the share capital indirectly,

(b) the share capital is owned directly by a company (“D”), and

(c) a profit on the sale of the shares would be a trading receipt for D.

(4) A company is a “trading company” if its business consists wholly or mainly of carrying on one or more trades.

(5) A company is a “relevant holding company” if its business consists wholly or mainly of holding shares in or securities of trading companies (as defined by subsection (4)) that are its 90% subsidiaries.

(6) A company is a “quasi-subsidiary” of R if—

(a) it is owned by a consortium of which R is a member,

(b) it is not a 75% subsidiary of any company, and

(c) no arrangements of any kind (whether in writing or not) exist as a result of which it could become a 75% subsidiary of any company.

(7) A company is owned by a consortium if at least 75% of the company's ordinary share capital is beneficially owned by two or more companies each of which—

(a) beneficially owns at least 5% of that capital,

(b) would be beneficially entitled to at least 5% of any profits available for distribution to equity holders of the company, and

(c) would be beneficially entitled to at least 5% of any asset of the company available for distribution to its equity holders on a winding up.

(8) The companies meeting those conditions are called the members of the consortium.

(9) Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of this section as it applies for the purposes of section 151(4)(a) and (b).

18N Close investment-holding companies

(1) For the purposes of this Part, a close company (“the candidate company”) is a close investment-holding company in an accounting period unless throughout the period it exists wholly or mainly for one or more of the permitted purposes set out in subsection (2).

There is an exception to this rule in subsection (5).

(2) The candidate company exists for a permitted purpose so far as it exists—

(a) for the purpose of carrying on a trade or trades on a commercial basis,

(b) for the purpose of making investments in land, or estates or interests in land, in cases where the land is, or is intended to be, let commercially (see subsection (3)),

(c) for the purpose of holding shares in and securities of, or making loans to, one or more companies each of which—

(i) is a qualifying company, or

(ii) falls within subsection (4),

(d) for the purpose of co-ordinating the administration of two or more qualifying companies,

(e) for the purpose of the making of investments as mentioned in paragraph (b)—

(i) by one or more qualifying companies, or

(ii) by a company which has control of the candidate company, or

(f) for the purpose of a trade or trades carried on on a commercial basis—

(i) by one or more qualifying companies, or

(ii) by a company which has control of the candidate company.

(3) For the purposes of subsection (2)(b), any letting of land is taken to be commercial unless the land is let to—

(a) a person connected with the candidate company (“a connected person”), or

(b) a person who is—

(i) the spouse or civil partner of a connected person,

(ii) a relative of a connected person, or the spouse or civil partner of a relative of a connected person,

(iii) a relative of the spouse or civil partner of a connected person, or

(iv) the spouse or civil partner of a relative of the spouse or civil partner of the connected person.

(4) A company falls within this subsection (see subsection (2)(c)(ii)) if—

(a) it is under the control of the candidate company or of a company which has control of the candidate company, and

(b) it exists wholly or mainly for the purpose of holding shares in or securities of, or of making loans to, one or more qualifying companies.

(5) If a company is wound up and was not a close investment-holding company in the accounting period that ends (by virtue of section 12(2) of CTA 2009) immediately before the winding up starts, the company is not treated for the purposes of this Part as being a close investment-holding company in the subsequent accounting period.

(6) In this section “qualifying company” means a company which—

(a) is under the control of the candidate company or of a company which has control of the candidate company, and

(b) exists wholly or mainly for either or both of the purposes mentioned in subsection (2)(a) or (b).

(7) In this section—

• “control” has the meaning given by section 450, and

• “relative” means brother, sister, ancestor or lineal descendant.”

PART 2 U.K. Amendments of Chapter 3A of Part 8 of CTA 2010

4 U.K. Chapter 3A of Part 8 of CTA 2010 (rates at which corporation tax is charged on ring fence profits) is amended as follows.

5 U.K. In section 279A (corporation tax rates on ring fence profits), in subsection (3), after paragraph (a) but before the “and” at the end of that paragraph insert—

“(ab) it is not a close investment-holding company in the period,”.

6 U.K. In section 279B (company with only ring fence profits)—

(a) in subsection (1), after paragraph (a) insert—

“(ab) it is not a close investment-holding company in the period,”,

(b) in subsection (2), in the definition of “R”, for “marginal” substitute “ ring fence marginal ”, and

(c) in subsection (3), for “marginal” substitute “ ring fence marginal ”.

7 (1) Section 279C (company with ring fence profits and other profits) is amended as follows. U.K.

(2) In subsection (1), after paragraph (a) insert—

“(ab) it is not a close investment-holding company in the period,”.

(3) For subsection (2) substitute—

“(2) 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.”

8 U.K. After section 279D insert—

“279DA The 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.”

9 (1) Section 279E (the lower limit and the upper limit) is amended as follows. U.K.

(2) In subsection (2)—

(a) in the opening words, for “If no company is a related 51% group company of A” substitute “ If A has no associated company ”,

(b) in paragraph (a), for “£300,000” substitute “ £50,000 ”, and

(c) in paragraph (b), for “£1,500,000” substitute “ £250,000 ”.

(3) In subsection (3)—

(a) in the opening words, for “If one or more companies are related 51% group companies of A” substitute “ If A has one or more associated companies ”,

(b) in paragraph (a), for “£300,000” substitute “ £50,000 ”, and

(c) in paragraph (b), for “£1,500,000” substitute “ £250,000 ”.

10 U.K. After section 279E insert—

“Supplementary U.K.

279EA Interpretation 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).”

11 U.K. Omit sections 279F to 279H (meaning of “related 51% group company” etc).

PART 3 U.K. Consequential amendments

FA 1998 U.K.

12 U.K. In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), in paragraph 8(1) (calculation of tax payable), in the second step, for “Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small ring fence profits etc)” substitute “ Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits) ”.

Corporation Tax (Instalment Payments) Regulations 1998 U.K.

13 (1) The Corporation Tax (Instalment Payments) Regulations 1998 (interpretation) are amended as follows. U.K.

(2) In regulation 2 (interpretation)—

(a) in paragraph (1), omit the entry for “related 51% group company”,

(b) in paragraph (2), for “section 279G” substitute “ sections 18L and 18M ”, and

(c) after that paragraph insert—

“(2A) The rules in Part 3A of CTA 2010 (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 of that Act apply for the purposes of these Regulations.”

(3) In regulations 3 and 3A (large and very large companies), for “related 51% group” (in each place) substitute “ associated ”.

FA 2000 U.K.

14 U.K. In Schedule 22 to FA 2000 (tonnage tax), in paragraph 57(6)(a) (exclusion of relief or set-off against tax liability), for “Chapter 3A of Part 8 of CTA 2010 (marginal relief for companies with small ring fence profits)” substitute “ Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits) ”.

CAA 2001 U.K.

15 U.K. CAA 2001 is amended as follows.

16 (1) Section 99 (long-life assets: the monetary limit) is amended as follows. U.K.

(2) In subsection (4)—

(a) for “In the case of a company (“C”), if, in a chargeable period, one or more companies are related 51% group companies of C” substitute “ If, in a chargeable period, a company has one or more associated companies ”, and

(b) in the definition of “N”, for “number of related 51% group” substitute “ number of associated ”.

(3) After that subsection insert—

“(4A) The rules in Part 3A of CTA 2010 (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 of that Act apply for the purposes of subsection (4).”

17 U.K. In Part 2 of Schedule 1 (defined expressions), omit the entry for “related 51% group company”.

CTA 2010 U.K.

18 U.K. CTA 2010 is amended as follows.

19 U.K. In section 1(2) (overview of Act)—

(a) for “Parts 4” substitute “ Parts 3A ”, and

(b) before paragraph (b) insert—

“(a) relief for companies with small profits (other than ring-fence profits) (see Part 3A),”.

20 (1) Section 357BN (profits arising from the exploitation of patents etc: small claims treatment) is amended as follows. U.K.

(2) In subsection (7)—

(a) in paragraph (a), for “no company is a related 51% group company of the company” substitute “ the company has no associated company ”,

(b) in paragraph (b), for “one or more companies are related 51% group companies of the company” substitute “ the company has one or more associated companies ”, and

(c) in the definition of “N”, for “those related 51% group” substitute “ those associated ”.

(3) After subsection (8) insert—

“(9) 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 this section.”

21 (1) Section 357BNB (profits arising from the exploitation of patents etc: small claims figure election) is amended as follows. U.K.

(2) In subsection (6), for “no company is a related 51% group company of the company” substitute “ the company has no associated company ”.

(3) In subsection (7)—

(a) for “one or more companies are related 51% group companies of the company” substitute “ the company has one or more associated companies ”, and

(b) in the definition of “N”, for “those related 51% group” substitute “ those associated ”.

(4) After subsection (9) insert—

“(10) 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 this section.”

22 U.K. In section 534 (REITs: profits), after subsection (2) insert—

“(3) Profits which—

(a) arise from the residual business of a UK company which is, or is a member of, a UK REIT, and

(b) are charged to corporation tax,

are to be charged at a rate determined without reference to sections 18A and 18B (companies with small profits).”

23 U.K. In section 535 (REITs: gains), after subsection (5) insert—

“(6) Gains which—

(a) accrue to residual business of a company which is, or is a member of, a UK REIT, and

(b) are charged to corporation tax,

are to be charged at a rate determined without reference to sections 18A and 18B (companies with small profits).”

24 U.K. In section 543 (REITs: financing-cost ratio), after subsection (4) insert—

“(5) Accordingly, it is charged to corporation tax at the main rate of corporation tax.”

25 U.K. In section 551 (REITs: distribution to holder of excessive rights), after subsection (5) insert—

“(6) Accordingly, it is charged to corporation tax at the main rate of corporation tax.”

26 U.K. In section 564 (REITs: breach of condition as to distribution of profits), after subsection (3) insert—

“(4) Accordingly, it is charged to corporation tax at the main rate of corporation tax.”

27 U.K. In section 614 (open-ended investment companies: applicable corporation tax rate), at the end insert “ (and sections 18A and 18B (relief for companies with small profits) do not apply) ”.

28 U.K. In section 618 (authorised unit trusts: applicable corporation tax rate), at the end insert “ (and sections 18A and 18B (relief for companies with small profits) do not apply) ”.

29 U.K. For section 627 substitute—

“627 Meaning of “main rate of corporation tax” for companies with ring fence profits or small profits

(1) This section applies if corporation tax chargeable on any profits of a company for a financial year—

(a) is to be charged at the main ring fence profits rate,

(b) is to be charged at the standard small profits rate or the small ring profits rate, or

(c) is to be reduced by reference to the standard marginal relief fraction or the ring fence marginal relief fraction (within the meaning of Part 3A or Chapter 3A of Part 8).

(2) References in this Chapter to the main rate of corporation tax are to be taken, so far as relating to profits charged at any of the rates mentioned in subsection (1)(a) or (b), as references to the rate or rates concerned.

(3) References in this Chapter to the main rate of corporation tax are, if corporation tax is reduced as mentioned in subsection (1)(c), to be taken as including references to the fraction or fractions concerned (and with references to a rate being “fixed” or “proposed” read accordingly as references to the fraction or fractions concerned being fixed or proposed).”

30 U.K. In section 1119 (Corporation Tax Acts definitions), omit the definition of “related 51% group company”.

31 U.K. In Schedule 4 (index of defined expressions)—

(a) insert the following entries at the appropriate places—

“close investment-holding company (in Part 3A or Chapter 3A of Part 8)

section 18N (including as applied by section 279EA)”

“the standard marginal relief fraction

section 18B”

“the standard small profits rate

section 18A”,

(b) in the entry for “augmented profits”—

(i) in the first column, before “Chapter 3A” insert “ Part 3A or ”, and

(ii) in the second column, for “section 279G” substitute “ sections 18L and 18M (including as applied by section 279EA) ”,

(c) in the entry for “the lower limit”—

(i) in the first column, before “Chapter 3A” insert “ Part 3A or ”, and

(ii) in the second column, after “section” insert “ 18D or ”,

(d) in the entry for “the marginal relief fraction”, in the first column, for “marginal” substitute “ ring fence marginal ” (and, accordingly, move the entry to the appropriate place),

(e) omit the entry for “related 51% group company”,

(f) for the entries for “ring fence profits” (in Parts 3 and 8) substitute—

“ring fence profits (in Part 3A or 8)

section 276 (including as applied by section 18A)”, and

(g) in the entry for “the upper limit”—

(i) in the first column, before “Chapter 3A” insert “ Part 3A or ”, and

(ii) in the second column, after “section” insert “ 18D or ”.

FA 2012 U.K.

32 U.K. In section 102 of FA 2012 (policyholders' rate of tax on policyholders' share of I - E profit), at the end insert—

“(5) The policyholders' share of the I - E profit for an insurance company's accounting period is to be left out of account in determining for the purposes of Part 3A of CTA 2010 (companies with small profits)—

(a) the augmented profits of the company for the accounting period, and

(b) the taxable total profits of the company for the accounting period.”

PART 4 U.K. Commencement etc

Commencement U.K.

33 U.K. The amendments made by paragraphs 13, 16, 17, 20 and 21 have effect in relation to accounting periods beginning on or after 1 April 2023.

34 (1) The other amendments made by this Schedule have effect for the financial year 2023 and subsequent financial years. U.K.

(2) In the case of an accounting period (a “straddling period”) beginning before 1 April 2023 and ending on or after date, those other amendments have effect as if the different parts of the straddling period falling in the different financial years were separate accounting periods.

(3) For this purpose all necessary apportionments are to be made between the two separate accounting periods.

Power to make further consequential amendments U.K.

35 (1) The Treasury may by regulations make such provision as they consider appropriate in consequence of the provision made by this Schedule. U.K.

(2) The regulations—

(a) may amend any provision of the Corporation Tax Acts or any other enactment, and

(b) may contain incidental, supplemental, consequential or transitional provision.