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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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ACT: tax credit & FA93: claims under ICTA88/S242 & S243

A company might have made a Section 242 claim on surplus franked investment income using franked investment income of 1993-94. Because of the restriction on the amount oftax credit paid for 1993-94 the surplus franked investment income so used was calculated as if the tax credit comprised in it was calculated at a rate of 1/4, (FA93/S78 (8)).

For identification of the surplus franked investment income, see CTM16215.

Franked investment income used in a Section 242 claim was deducted from surplus franked investment income carried forward for the purposes of ICTA88/S241 and ICTA88/SCH13, (ICTA88/S242 (1)(b)). Because for 1993-94 franked investment income was generally calculated with a tax credit at 9/31, but for Section 242 purposes was calculated with a tax credit at 1/4, this would have left an amount remaining which represented the difference between the tax credit rates. To overcome this a further reduction was made from the surplus franked investment income carried forward to represent this difference, (FA93/S78 (9)).