FINANCE BILL 2002: EXPLANATORY NOTE
CLAUSE 30: CORPORATION TAX - CHARGE AND MAIN RATE FOR FINANCIAL YEAR 2003
SUMMARY
This clause charges corporation tax for the financial year beginning 1 April 2003 and sets the main rate at 30 per cent (no change from the previous year).
BACKGROUND NOTE
1. The main rate of corporation tax is paid by companies with profits of more than £1,500,000 (the upper profits limit).
2. Where two or more companies are associated with one another, the profits limit is reduced. This is done by dividing the limit by the number of associated companies. So, if a company has two associated companies (i.e. there are three associated companies in total), the limit becomes £500,000 (£1,500,000 divided by three) and any of the associated companies with profits above this level is liable at the main rate.
3. About 35,000 companies pay corporation tax at the main rate. They make up less than 10 per cent of all corporation tax payers, but contribute around 85% of the total corporation tax yield.