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EXPLANATORY NOTE
CLAUSE 35: CORPORATION TAX CHARGE
AND RATES CHARGE AND MAIN RATE FOR FINANCIAL YEAR 2001
SUMMARY
This clause charges corporation tax
for the financial year beginning 1 April 2001 and sets the main rate
at 30 per cent (the same as for the previous year).
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BACKGROUND
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The main rate of corporation tax is paid by companies
with taxable profits of more than £1,500,000 (the upper profits
limit).
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Where two or more companies are associated with
one another, the profits limit is reduced. This is done by dividing
the profits limit by the number of companies that are associated
together. So, if there are three associated companies, the upper
profits 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.
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About 10 per cent of companies which pay corporation
tax do so at the main rate, and they contribute around 85% of
the total corporation tax yield.
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