CTM20150 - ACT: set-off against CT on profits: maximum

ICTA88/S239 (2)

ACT was set-off against CT charged on all of a company’s profits (accounting periods beginning on or after 17 March 1987).

Example

Company A is liable to CT for the 12 months accounting period to 30 September 1988 as follows.

Trading income £200,000

CG (gain less losses brought forward) £600,000

£800,000

Less charges £10,000

£790,000

CT at 35% £276,500

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During the accounting period (after 5 April 1988) the company paid dividends of £270,000 on which ACT of £90,000 was paid. Company A also had at 1 October 1987 surplus ACT brought forward of £150,000.

Maximum set-off of ACT:

27% of apportioned profits to 31 March 1988

(6 / 12 of £790,000 = £395,000) £106,650

25% of apportioned profits to 30 September 1988

(6 / 12 of £790,000 = £395,000) £98,750

The CT payable is: £205,400

CT (as above) £276,500

Less set-off of ACT £205,400

£71,100

make a claim under ICTA88/S239 (3) (see CTM20170 - CTM20240), orCompany A has surplus ACT of £34,600 (£150,000 + £90,000 - £205,400).

The company can:

• carry forward under ICTA88/S239 (4) (see CTM20250).