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HMRC internal manual

Company Taxation Manual

Corporation Tax: introduction: IT deducted from income received

CTA09/S3 (formerly ICTA88/S6 (2) - company not normally liable to income tax) and CTA10/S967 (formerly ICTA88/S7(2) - set off of income tax suffered

A company may suffer IT by deduction on annual interest, royalties and other annual payments it receives. Such interest, etc, is income, and the gross amount forms part of the total profits on which the company is chargeable to CT. The income is not within the charge to IT and so the company is entitled to repayment of the balance remaining of any IT suffered after it has been set-off under CTA10/S967 (1) - (3) (formerly ICTA88/S7 (2)) against any tax assessable on the company.

However, the tax deducted from income received by a company may under ITA07/S952 be set against the tax deductible under ITA07/S848 (formerly ICTA88/S349) from payments of annual interest, etc, made by a company. ITA07/Part15 replaced the ICTA88/SCH16 collection provisions for income tax on company payments.