United Kingdom corporation tax

Corporation tax is a tax levied in the United Kingdom on the profits made by UK-resident companies and associations. It is also levied on non-UK resident companies and associations which trade in the UK through a permanent establishment. The tax was introduced by the Finance Act 1965, and has been levied from 1 April 1965. The Finance Act 1965 simultaneously removed companies and associations that became liable to corporation tax from the charge to income tax. The tax borrowed its basic structure and many of its rules from income tax, and it is only from 2003 onwards, when the Income Tax (Earnings and Pensions) Act was enacted, that the rules started to diverge.

Related Topics:
Tax - United Kingdom - Profit - Companies - Associations - Permanent establishment - 1 April - 1965 - Income tax - 2003

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Recently the tax has come under pressure from a number of sources. Tax competition between jurisdictions has reduced the headline charge to 30%; judgments from the European Court of Justice have found that certain aspects of UK corporate tax law are discriminatory under European Union treaties; and tax avoidance schemes marketed by the big accountancy and law firms and by banks have threatened the tax base. The British Government has responded to the last two by introducing ever more complex legislation to counter the threats.

Related Topics:
European Court of Justice - European Union - Tax avoidance - Accountancy

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At the same time, the complexity in the system is well recognised, and the Government, supported by the Opposition parties, is committed to widescale Corporation Tax Reform. However, as of 2005, the only legislation produced under this banner has been a rewrite of rules for calculating the deductible management expenses for companies with investment business and for life assurance companies.

Related Topics:
2005 - Life assurance

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