Overview

The Corporation Tax Act 2010 (CTA 2010) restates and slightly amends existing laws related to corporation tax in the UK, covering various aspects of tax calculation, reliefs, and special provisions for different types of companies and business activities. It aims to clarify and consolidate existing legislation, addressing tax avoidance schemes and ensuring fairer taxation.

Description

CTA 2010 comprehensively addresses UK corporation tax, encompassing several key areas:

Tax Calculation

The Act details how corporation tax liability is calculated, specifying tax rates (main rate and small profits rate), the determination of taxable profits (including adjustments for reliefs and gains), and rules for handling calculations in currencies other than sterling.

Tax Reliefs

CTA 2010 outlines various tax relief mechanisms, including:

• Relief for companies with small profits (marginal relief included).
• Relief for trade losses (with specific rules for different industries and situations).
• Relief for property business losses (for both UK and overseas properties).
• Relief for losses on share disposals (subject to qualifying trading company conditions).
• Relief for losses from miscellaneous transactions.
• Group relief (allowing companies within a group to offset losses and other amounts).
• Charitable donations relief.
• Community investment tax relief.

Special Provisions

The Act contains specific provisions for:

• Oil activities (including ring-fence provisions).
• Leasing of plant and machinery.
• Close companies (tax implications for loans to participators).
• Charitable companies (exemptions and restrictions).
• Real Estate Investment Trusts (REITs) (tax treatment, eligibility requirements).
• Various other company types (e.g., those in liquidation, banks in compulsory liquidation, co-operative housing associations, self-build societies, amateur sports clubs).

Tax Avoidance

Significant sections of the Act address tax avoidance schemes, particularly those involving changes in company ownership, transactions in securities, factoring of income, manufactured payments, land transactions, and sale and lease-back arrangements.

Government Spending

The Act's impact on government spending is complex and indirect. It doesn't directly allocate funds, but changes in corporation tax rates and reliefs could influence the amount of tax revenue collected. The Act's provisions for tax avoidance could reduce potential revenue loss from such schemes.

Groups Affected

The Act affects numerous groups, including:

• Companies: All companies in the UK are affected by the changes in tax calculations and reliefs, particularly those with small profits, investment businesses, oil and gas operations, or involved in leasing. Tax avoidance measures will also impact companies engaging in related schemes.
• Shareholders: Tax credits and dividend distributions rules affect shareholders. Specific rules for holders of excessive rights are included.
• Partnerships and LLPs: Specific rules govern the tax treatment of losses and reliefs for partnerships and limited liability partnerships, particularly those engaged in leasing activities.
• Charities: The Act introduces significant changes related to charitable donations and the tax treatment of charitable companies and similar organizations.
• REITs: REITs face specific requirements and tax implications detailed in the Act.
• Government: The Act influences government revenue through changes to tax laws and anti-avoidance measures.
• Other specialized groups: The Act includes tailored provisions for specific sectors such as oil, banking, and community organizations.

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