First Previous (Chapter II Taxation of Farming Profits) Next (Chapter IV Corporation Tax in Relation to Certain Manufacturing Companies)

18 1977

FINANCE ACT, 1977

Chapter III

Corporation Tax

Charge of corporation tax for financial year 1977 and subsequent financial years.

15. Section 1 (1) of the Corporation Tax Act, 1976 , shall have effect for the financial year 1977 and each subsequent financial year as if for “50 per cent.” there were substituted “45 per cent.”.

Amendment of sections 13 and 37 (chargeable gains of companies) of Corporation Tax Act, 1976.

16. —(1) Sections 13 (1) and 37 (3) (a) of the Corporation Tax Act, 1976 , shall have effect as if “twelve-twenty-fifths” were substituted for “48 per cent.”.

(2) The said sections 13 (1) and 37 (3) (a), as amended by subsection (1), are hereby amended as respects the financial year 1977 and each subsequent financial year as if for “twelve-twenty-fifths” there were substituted “nineteen-forty-fifths”.

(3) Where, under the said section 13 (1), as amended by the preceding subsections, different fractions are in force in different parts of an accounting period—

(a) the amount of the chargeable gains for the accounting period (computed in accordance with the said section 13 (1), but without making the fractional reduction specified therein) shall be apportioned between those parts, and

(b) the portion for each part shall be reduced under the said section 13 (1) by the fraction in force in that part.

Amendment of section 28 (reduction of corporation tax liability of small companies) of Corporation Tax Act, 1976.

17. —(1) Section 28 of the Corporation Tax Act, 1976 , shall have effect for the financial year 1977 and each subsequent financial year as if—

(a) in subsection (1) for “40 per cent.” there were substituted “35 per cent.”,

(b) in subsection (2) for “10 per cent.” there were substituted “20 per cent.” and

(c) in subsection (3) for each reference to £5,000 there were substituted a reference to £10,000 and for each reference to £10,000 there were substituted a reference to £15,000.

(2) Where, by virtue of subsection (1), the said section 28 has effect with different lower and upper relevant maximum amounts in relation to different parts of the same accounting period of a company, those parts shall be treated for the purposes of that section as if they were separate accounting periods of the company, and profits and income (within the meaning, in both cases, of the said section 28) of the company for the first mentioned period shall be apportioned between those parts.

(3) (a) Section 28 (7) of the Corporation Tax Act, 1976 , is hereby amended by the insertion after “companies within the group” of “, and for this purpose a company shall be treated as a member of a group and franked investment income received by the company from another company shall be treated as coming from companies within the group where, but only where, if such income had been such payment as is referred to in section 105 (1), it would have been paid without deduction of income tax or would have been so paid if the companies had so elected”, and the said subsection (7), as so amended, is set out in the Table to this section.

(b) This subsection shall have effect as respects franked investment income arising in the year 1976-77 or in subsequent years of assessment.

TABLE

(7) For the purposes of the foregoing subsections the profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income other than franked investment income which the company (if a member of a group) receives from companies within the group, and for this purpose a company shall be treated as a member of a group and franked investment income received by the company from another company shall be treated as coming from companies within the group where, but only where, if such income had been such payment as is referred to in section 105 (1), it would have been paid without deduction of income tax or would have been so paid if the companies had so elected.

Amendment ofsection 79 (reduced rate of corporation tax for certain income) of Corporation Tax Act, 1976.

18. Section 79 (1) of the Corporation Tax Act, 1976 , shall have effect for the financial year 1977 and each subsequent financial year as if for “35 per cent.” there were substituted “30 per cent.”.

Application of sections 182 and 184 (relief in respect of certain losses and capital allowances) of Corporation Tax Act, 1976.

19. —(1) Where an accounting period falls partly in the financial year 1976 and partly in the financial year 1977, the two parts of the accounting period shall be treated, for the purposes of sections 182 and 184 of the Corporation Tax Act, 1976 , as if they were separate accounting periods.

(2) Where, under subsection (1), a part of an accounting period is treated as a separate accounting period, the corporation tax charged for the part which is so treated shall, for the purposes of the said section 184, be taken to be the corporation tax which would be charged if that part were a separate accounting period.

(3) Sections 182 (3) and 184 (3) of the said Act shall have effect for any accounting period, or any part of an accounting period treated under subsection (1) as a separate accounting period, falling wholly after the 31st day of December, 1976, as if the standard rate for the year of assessment 1976-77 and each subsequent year of assessment were 30 per cent.