Chapter CFM32045

Published date16 April 2016
Record NumberCFM32045
Example 1

In an accounting period beginning on 1 January 2016, a UK company received an overseas dividend of £200,000, with foreign tax paid of £36,000, and UK trading profits of £50,000.

In the previous accounting period, it had a non-trading deficit of £300,000 to be carried forward under CTA09/S457.

Although the company has trading profits, as the non-trading deficits arise in an accounting period beginning before 1 April 2017, the carried forward non-trading deficits cannot be set against the trading profits.

In order to maintain maximum foreign tax credit relief the company claims under S458(1) to set only £70,000 of the non-trading deficits brought down against the non-trading profits of the period. The unutilised £230,000 deficits are carried forward to set against the non-trading profits of the following period.

Dividend 200,000
Part deficit cf (70,000)
Net non-trading Profits 130,000
Trading profits 50,000
CT@20% 36,000
Double taxation tax credit relief 36,000
CT payable Nil
Example 2

In an accounting period beginning on 1 June 2018, a UK company has trading income of £100,000 and property income of £70,000.

It also has non-trading deficits of £300,000 carried down from the previous accounting period...

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