EXPLANATORY NOTE

1 This clause charges corporation tax for the financial year beginning 1 April 2000 and sets the main rate at 30 per cent (the same rate as for the previous year).

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2. The main rate of corporation tax is paid by companies with taxable profits of more than £1,500,000. Approximately 10 per cent of companies which pay corporation tax do so at the main rate, contributing around 85 per cent of the total yield.

3. Companies with profits of up to £1,500,000 (the upper profits limit) pay corporation tax at a reduced rate. Companies with profits of up to £300,000 (the lower profits limit) pay corporation tax at the small companies’ rate (20 per cent from 1 April 1999). Companies with profits between £300,000 and £1,500,000 receive marginal relief to ease the transition to the main rate.

4. Where companies are associated with one another, the profits limits are reduced. Each limit is divided by one plus the number of associated companies.