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HMRC internal manual

Company Taxation Manual

ACT: tax credit & FA93: franked investment income: used to frank payments

No franked investment income was available to frank payments under ICTA88/S241 and ICTA88/SCH13 if the amount of tax credit comprised in it had been paid to the company as an exempt body (ICTA88/S231 (2) and ICTA88/S241 (5)).

The result of the rules for 1993-94 was that the tax credit comprised in franked investment income was at 9/31, but payment of the tax credit under Section 231 (2) would have been at the rate of 1/4. Thus for the purposes of Section 241 (5), if the tax credit at 1/4 in respect of a distribution had been paid, there was deemed to be no further amount of tax credit in respect of that distribution available to frank payments (FA93/S78(7)).