CT Rate from 1/4/23 for Investment Companies

Looking for clarity on the CT rate for property companies

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Hi

I am looking for clarity on what the CT rate will be from 1/4/23 for those small companies owned by 5 or fewer participtors holding a handful of properties that are let out and have profits under £50,000. Is it 19% - or 25% with no marginal rate relief?

I read on HMRC site.... 

"In line with the approach taken with the former rules, the small profits rate will not apply to close investment-holding companies. The definition of a close investment-holding company will follow the definition previously found at section 34 CTA 2010. "

https://www.gov.uk/government/publications/corporation-tax-charge-and-ra...

Would be grateful for clarity on this

 

 

Replies (9)

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By Wanderer
09th Feb 2023 10:17

(Old) S34 CTA2010 (2) (b) is your friend:-
https://www.legislation.gov.uk/ukpga/2010/4/section/34/2010-04-01

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Replying to Wanderer:
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By Southbankdelboy
09th Feb 2023 10:44

Wanderer wrote:

(Old) S34 CTA2010 (2) (b) is your friend:-
https://www.legislation.gov.uk/ukpga/2010/4/section/34/2010-04-01


Thanks for your reply. We knew it was not an investment holding company however it is a property company that has to tick the box on the CT600 "Should the property be taxed as a property business" Sorry if obvious, from the reply can we safely say that a property company receiving rental income would be taxed at 19% (on profits up to £50k) from April?
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Replying to Southbankdelboy:
By Ruddles
09th Feb 2023 11:03

Southbankdelboy wrote:
can we safely say that a property company receiving rental income would be taxed at 19% (on profits up to £50k) from April?

No.

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Replying to Ruddles:
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By Justin Bryant
09th Feb 2023 11:26

But it's very likely, n'est ce pas (i.e. as long as it's commercially let to non-relatives etc.)?

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Replying to Justin Bryant:
By Ruddles
09th Feb 2023 11:43

Yes, but "very likely" is not the same as "safely". I have a number of clients that receive rental income from property and for whom it would be anything but safe to say that their profits (most below £50k) will not be taxed at 25%.

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Replying to Ruddles:
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By Justin Bryant
09th Feb 2023 11:50

It's all relative as they say (re <£50k).

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Replying to Justin Bryant:
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By Southbankdelboy
09th Feb 2023 11:53

Justin Bryant wrote:

It's all relative as they say (re <£50k).


No pun intended!
We checked another source and understand that 19% does apply as long as commercially let at arms length to unconnected parties.

Thanks to all for your replies

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Replying to Ruddles:
paddle steamer
By DJKL
09th Feb 2023 11:58

Concur- it is not always the company before you that sets the rate but rather the other companies that are currently sight unseen.

I hated the small company marginal relief calcs and have not even read the new rules, apart from numbers does it work like the old one re splitting the bands re both period length and number of associates?

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Replying to DJKL:
By Ruddles
09th Feb 2023 12:09

As far as I can tell, the rules are exactly as they were before.

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