HMRC internal manual

Company Taxation Manual

Corporation Tax: introduction: basis of charge to CT

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

A company (see CTM00510) resident in the UK is chargeable to CT on all its profits (CTM01110) wherever the profits arise and whether or not these profits are received in, or transmitted to, the UK.

The charge to CT is made on the profits arising in a company’s accounting period (CTM01400 onwards).

So the CT computation for any company for an accounting period includes:

  • any income of the company arising in that accounting period which is within the charge to CT, subject to any specific modifications provided by the Taxes Acts, and
  • any chargeable gains arising in that accounting period.

Income and chargeable gains are aggregated to arrive at the total profits of the accounting period.

CTM02250 deals with chargeable gains and CTM34200 non resident companies.

CT is normally due and payable nine months and one day from the end of that accounting period (CTM92000 onwards). However, large companies pay tax in quarterly instalments (with transitional provisions for accounting periods ending between 1 July 1999 and 30 June 2002) - see CTM92500 onwards for further details.

  • Before 6 April 1999 where a company paid a dividend or other qualifying distribution (CTM20070) it had to make a payment of ACT. This was calculated by reference to the amount or value of that distribution in accordance with the provisions of ICTA88/SCH13. The ACT was normally set-off against the CT chargeable on the profits of the accounting period in which the distribution was made. See CTM15000 onwards for more on distributions, and CTM20000 onwards for more on ACT.

Members of groups of companies resident in the UK are assessable separately to CT, but are subject to a number of special provisions. See CTM80000 onwards for more on groups of companies.

A company not resident in the UK is chargeable to CT only if it carries on a trade in the UK through a permanent establishment (previously, branch or agency). Broadly such a company is chargeable only on the profits which relate to that permanent establishment (CTM34210). In this context profits do not include distributions received from a company resident in the UK. The provisions for the payment of ACT and for the deduction and accounting for IT do not apply to a non-resident company although the provisions of ITA07/Part15/Chapter 15 (formerly ICTA88/SCH16) will apply if the company is a deposit taker.

See CTM93005 on notifying chargeability under the CTSA system.