Overview

The Corporation Tax Act 2010 restates and slightly modifies existing laws regarding corporation tax and company distributions. It clarifies tax calculations, introduces reliefs for companies with small profits and loss situations, outlines group relief rules, and details the tax treatment of various special company types, such as charities, Real Estate Investment Trusts (REITs), and oil companies.

Description

The Act is structured into several parts covering various aspects of corporation tax. Part 2 focuses on calculating corporation tax liability based on a company's profits, specifying tax rates (Chapter 2), profit calculation (Chapter 3), and currency used (Chapter 4, primarily Sterling). Parts 3 to 7 detail specific tax reliefs, including those for companies with small profits, trade losses, property losses, share losses, miscellaneous losses, group relief, charitable donations, and community investments.

Parts 8 to 13 address the unique tax situations of oil companies, leasing businesses, close companies, charitable organizations, REITs, and other specialized company structures. Part 14 tackles tax avoidance related to changes in company ownership, including provisions for preventing the use of losses after ownership changes. Parts 15 to 21 cover tax avoidance measures surrounding securities transactions, factoring of income, manufactured payments, land transactions, sale and lease-back arrangements, and leasing partnerships. Part 22 includes miscellaneous provisions about trade transfers, relief transfers within partnerships, tax refund surrenders within groups, income tax deductions against corporation tax, and tax collection from non-UK resident company representatives.

Part 23 defines company distributions, specifying what constitutes a distribution and outlining exceptions, such as those related to winding-up and cross-border mergers. Finally, Part 24 defines terms used throughout the Corporation Tax Acts, while Part 25 includes general application provisions and definitions.

Government Spending

The Act's impact on UK government spending is complex and indirect. The various reliefs and exemptions introduced will reduce the amount of corporation tax collected, leading to a decrease in government revenue. The magnitude of this reduction would depend on the number and size of companies claiming these reliefs.

Groups affected

• Companies: All companies are affected, with varying impacts based on size, type of business, and financial status. Some may benefit from new reliefs while others may face stricter tax avoidance rules.
• Charities: New rules and clarifications affect their tax liabilities and exemptions regarding donations and investments.
• REITs: Specific provisions are laid out for their tax treatment, including entry and exit charges and distributions to shareholders.
• Oil and gas companies: Specific rules govern the calculation of profits and allowances for these companies.
• Leasing businesses: The act introduces rules and limitations to prevent tax avoidance through leasing arrangements.
• Close companies: New rules and a charge for loans to participators apply to these companies.
• Partnerships and LLPs: Restrictions on the amount of relief available for losses incurred through partnerships and limited liability partnerships.
• Shareholders and investors: Depending on the company type and tax strategies, shareholders and investors will face varying changes to their tax implications.

Powered by nyModel