Overview

The Corporation Tax Act 2009 restates and slightly modifies existing laws concerning corporation tax in the UK. It clarifies rules on tax computation, company residence, and provides relief for specific types of expenditure and particular situations.

Description

This Act establishes the basic framework for corporation tax, defining the charge on company profits (income and gains). It clarifies the territorial scope of the charge, distinguishing between UK-resident and non-UK resident companies. For non-UK resident companies, the charge is dependent on operations in the UK through a permanent establishment. The Act introduces rules on accounting periods, company residence, and outlines how tax is charged and assessed. It details the rules for calculating trading income, including the treatment of farming, land, and specific trades. Rules are set out for property income, loan relationships, and derivative contracts, including methods of recognizing credits and debits. The Act also addresses the treatment of intangible fixed assets, providing for roll-over relief and accounting adjustments. Specific reliefs are granted for employee share schemes, research and development, and contaminated land remediation. The Act covers miscellaneous income sources and contains general calculation rules, including deductions.

Government Spending

The Act doesn't directly state a specific figure for its effect on government spending. However, it introduces various tax reliefs and credits (e.g., R&D tax credits, film tax relief), which could potentially reduce government tax revenue. The overall impact on government spending would depend on the extent to which companies claim these reliefs and credits.

Groups Affected

• Companies: All companies, both UK and non-UK resident, are affected. UK resident companies are liable for tax on all profits. Non-UK resident companies are liable on profits attributable to permanent establishments in the UK. The Act impacts their tax calculations, accounting methods, and eligibility for various tax reliefs.
• Partnerships: The Act outlines specific rules for partnerships involving companies, affecting the tax treatment of profits and losses.
• Insurance Companies: Special rules govern the treatment of insurance companies in areas such as the calculation of profits, loan relationships, and derivative contracts.
• Employees: The Act provides tax relief for companies on employee share acquisition schemes and specific employee expenses, potentially affecting their benefits.
• Film Production Companies: Specific rules regarding taxation and film tax relief are included, impacting their profitability.
• Researchers and Developers: The Act provides significant reliefs and tax credits for companies involved in research and development, incentivizing investment in these areas.
• Landowners: The Act includes provisions relating to land remediation, providing tax deductions and credits for costs incurred in cleaning up contaminated land.

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