Finance Act, 1966

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Allowance of United Kingdom corporation tax as a credit against income tax.

4.—(1) In this section and the First Schedule to this Act—

“company” means any body corporate;

“corporation tax” means the tax in the United Kingdom known as corporation tax;

“profits” in relation to income tax means income;

“United Kingdom” means Great Britain and Northern Ireland, excluding the Channel Islands and the Isle of Man.

(2) Subject to the provisions of the First Schedule to this Act, corporation tax payable in respect of profits arising in the United Kingdom shall, to the extent to which it is to be taken into account for the purposes of this section, be allowed as a credit against the income tax chargeable for any year of assessment by reference to those profits.

(3) Where a dividend is paid by a company resident in the United Kingdom to a company which beneficially owns, directly or indirectly, not less than three-quarters of the ordinary share capital of the former company, the credit shall take into account the corporation tax payable by the former company in respect of its profits.

(4) The corporation tax payable in respect of any profits shall be taken into account for the purposes of this section—

(a) where the profits are subject to corporation profits tax, only to the extent that it cannot, on due claim having been made in that behalf, be allowed as a credit against corporation profits tax, or

(b) where the profits are not subject to corporation profits tax, only to the extent that it could not, on due claim having been made in that behalf, have been allowed as a credit against corporation profits tax if the profits had been subject to that tax as profits of a company incorporated by or under the laws of the State.

(5) (a) The definition of “double taxation relief” in section 13 (2) of the Finance Act, 1950 , is hereby amended by the insertion after “by virtue” of “of section 4 of the Finance Act, 1966, or”.

(b) In a case in which relief is allowed under this section, section 13 (4) of the Finance Act, 1950 , shall have effect in relation to a dividend paid before the passing of this Act as it has effect in relation to a dividend paid before the passing of the Finance Act, 1950 .