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HMRC internal manual

Company Taxation Manual

Distributions: impact on Corporation Tax: receipt by UK resident company

A distribution from a UK resident company is income in the hands of an individual who receives it. See SAIM5020 for the treatment of a distribution in the hands of an individual beneficially entitled to it.

A UK resident company is not chargeable to IT or CT in respect of any distribution received from another UK resident company. The rule formerly at ICTA88/S208 was briefly re-enacted as CTA09/S1285. Following the enactment of CTA09/PART9A by FA09/SCH14, the treatment of distributions in the hands of a UK resident company does not distinguish between origin in a UK resident or non-UK resident company. Exemption applies to both subject to certain exceptions - see INTM651000 onwards.

Where the distribution is a qualifying distribution, other than a foreign income dividend (FID -see CTM20070), the distribution plus the tax credit is franked investment income of the recipient company (see CTM16120).

Where the qualifying distribution:

  • is a dividend,


  • has been paid, prior to 6 April 1999, under an ICTA88/S247 election without the paying company accounting for ACT,

the distribution is ‘group income’ of the receiving company (see CTM80070).

When, prior to 6 April 1999, the qualifying distribution received was an FID, the FID received could frank FID paid (see CTM21250).

A non-qualifying distribution (see CTM15900onwards) is neither income nor franked investment income in the hands of the receiving company.

Where the recipient is a non-UK resident company, see CTM34270.