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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Corporation Tax: introduction: definition of company profits

CTA09/S2 (2), formerly ICTA88/S6 (4)

The profits of a company resident in the UK which are chargeable to CT for any accounting period are:

  • its income for that accounting period, except
    • non-qualifying distributions, and distributions which are exempt by virtue of CTA09/PART9A (see below), plus

    • its chargeable gains for that period. So, for CT, ‘income’ and ‘profits’ are not interchangeable terms.

    CTA09/PART9A deals with the treatment of distributions in the hands of a company recipient. It covers both domestic and foreign distributions received, and exempts them with certain limited exceptions. It was introduced by FA09/SCH14 as part of the major change in treatment of foreign distributions. Previously the exemption for foreign distributions was at ICTA88/S208, which was briefly CTA09/S1285 before FA09/SCH14 came into effect.