2010 Budget changes New time limits for

assessments and claims

The normal time limits for
Changes affecting the CT600 Corporation Tax are decreasing from
six years to four years from the end

Company Tax Return form of the accounting period. There is

now a new normal four-year time
limit for assessments and claims, from
1 April 2010, for Capital Gains Tax,
Announcements in the March 2010 Budget mean that we will be updating
Corporation Tax, Income Tax, PAYE
the CT600 Guide Company tax return form guide. The main CT600 Company
and VAT.
Tax Return form does not need to be updated on this occasion, but you should
bear in mind that generally you cannot make a claim under any new proposal For more information go to
www.hmrc.gov.uk/about/
until the Finance Bill receives Royal Assent and becomes law. We will update
new-compliance-checks.htm
CT Online services as quickly as possible.
This Budget Insert tells you about some of the main changes affecting
Corporation Tax. For further details about Budget measures, the up to date New failure to notify penalty
position and the availability of forms go to www.hmrc.gov.uk HMRC is introducing the failure
to notify penalty across most taxes
when people fail tell us about
a relevant obligation, at the
Rates of Corporation Tax correct time. The new penalty
For the financial year 2010 starting on 1 April 2010 the main and small companies will apply from 1 April 2010 to
rates of Corporation Tax remain the same as they were in 2009. You can use the rates a company that has not received
announced in the Budget before Royal Assent. a notice to file a company tax return
Rates, limits and fractions for financial years starting 1 April and has not told HMRC that they
are chargeable to tax within
2009 2010
12 months from the end of their
Main rate 28% 28% accounting period.
Main rate on ring fence profits* 30% 30% For more information go to
Small profits rate 21% 21% www.hmrc.gov.uk/about/
Small profit rate on ring fence profits 19% 19% new-penalties/index.htm

Lower limit £300,000 £300,000

Upper limit £1,500,000 £1,500,000 Publishing details
Marginal relief standard fraction 7/400 7/400 of deliberate defaulters
From 1 April 2010 under strictly
Marginal relief ring fence fraction 11/400 11/400
controlled circumstances, HMRC
Rate for unit trusts and can publish the details of people who
open ended investment companies 20% 20% are penalised for deliberately evading
*Ring fence profits mean the income and gains from oil extraction activities at least £25,000 of tax, if they do not
or oil rights in the UK and UK continental shelf. fully cooperate with our investigation.
For more information go to
www.hmrc.gov.uk/about/
tax-defaulters-q-a.htm
Charitable donations relief
It was announced in the Budget that charitable donations relief will be extended
to qualifying donations made to certain organisations established in the European
Union (EU), in Norway or in Iceland. Relief will be available for donations made from
1 April 2010. You will need to show in your tax computations separate totals for
qualifying donations to charities established in the UK, and to those established
in the EU, Norway or Iceland. A new definition of an organisation eligible for UK
charity tax reliefs, applies as from 1 April 2010 and charities will be able
to apply to HMRC to confirm that they are eligible. Further guidance is available
at www.hmrc.gov.uk/businesses/giving/index.htm

CT600 Budget Insert (March 2010) Page 1 HMRC 03/10

Annual investment allowance Example 1
It was announced in the Budget that the maximum allowance for annual investment A company with a calendar year
allowance (AIA) is being increased to £100,000 for expenditure incurred on or after chargeable period from 1 January 2010
1 April 2010. The maximum allowance is proportionately reduced if the accounting to 31 December 2010 would calculate
period is less than a year. its maximum AIA entitlement based on:
(a) the proportion of a year from
However, for companies whose chargeable period spans 1 April 2010, transitional
1 January 2010 to 31 March 2010,
rules apply. The rules provide that the maximum allowance is the sum of each
that is, 3/12 x £50,000 = £12,500, and
maximum allowance that would be found if the actual chargeable period were split
(b) the proportion of a year from
into two chargeable periods. The first beginning with the first day of the chargeable
1 April 2010 to 31 December 2010,
period and ending with the day before the relevant date. The second beginning
that is, 9/12 x £100,000 = £75,000.
on the relevant date and ending with the last day of the chargeable period.
The company’s maximum AIA for this
So where a business has a chargeable period that spans the relevant date of the increase,
transitional chargeable period would
the maximum allowance for that business’s transitional chargeable period is the sum of:
therefore be the total of (a) + (b):
(a) the maximum AIA entitlement, based on the previous £50,000 annual cap for
£12,500 + £75,000 = £87,500.
the portion of a year falling before the relevant operative date, and
(b) the maximum AIA entitlement, based on the new £100,000 cap for the portion
of a year falling on or after the relevant date. Example 2
Please see Example 1 aside. A company with a calendar year
chargeable period would have
However, the rules also effectively provide that in the part of the chargeable period
a maximum entitlement under
falling before 1 April 2010, only a maximum of £50,000 of the company’s expenditure
the main transitional rule (4)
would be covered (in other words the previous AIA limit would apply). Returning
of £87,500, but if the company
to Example 1 aside, this rule does not affect the business’s maximum AIA for the
spent, say, £70,000 in February 2010
chargeable period as a whole (which is £87,500), simply the amount of expenditure
and incurred no other qualifying
before the relevant start date that may be covered. Please see Example 2 aside.
expenditure for the remainder of
We will update our systems to accommodate the new maximum allowance the year, the maximum AIA available
as soon as possible, but until we do so, you will not be able to send in your to that company would be £50,000.
company tax return online if you are taking advantage of the new maximum.

Tax law rewrite

The Corporation Tax Act 2009 (CTA 2009) took effect for accounting periods ending
on or after 1 April 2009 and the Corporation Tax Act 2010 (CTA 2010) will take effect
for accounting periods ending on or after 1 April 2010. The two acts will eventually
require amendments to the CT600 Company Tax Return form (including changes
to the statutory references) but we have not made those changes yet. So please
continue to complete the form as if there were no amalgamation of UK and foreign
source income and, where relevant, as if the statutory references were to the
corresponding provisions of CTA 2009 and CTA 2010. More guidance will be given
in the CT600 Guide. The table below tells you where you can find the statutory
references for supplementary pages CT600A, CT600C, CT600H and CT600I.

Tax law rewrite – supplementary pages

Supplementary
page Brief description Statutory references
CT600A Loans Paragraphs 1, 2(4) and 8(1)
to participators of Schedule 18 to the Finance Act 1998
Chapter 3 of Part 10 of CTA 2010
CT600C Group Group relief – Part VIII of Schedule 18
and consortium to the Finance Act 1998
Part 5 of CTA 2010
CT600H Cross-border Paragraph 3(5) of Schedule 18
royalties to the Finance Act 1998
Sections 911, 912, 914 and 915
of the Income Tax Act 2007
CT600I Supplementary Paragraphs 1 and 8(1) of Schedule 18
charge to the Finance Act 1998
Chapter 5 of Part 8 of CTA 2010

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