UK company taxation - changes on international matters
We have seen a lot of changes this year to the way the UK looks at taxing internationally. The four key changes are:
- The tax rules applying to UK and overseas source dividends are now brought within a single charging regime. All dividends and other distributions (excluding capital distributions) paid on or after 1 July 2009 are taxable unless they fall with a (fortunately wide) exemption. The effect of the new rules is, broadly, to exempt all dividends from corporation tax unless they fall within certain anti-avoidance rules.
- There is now a cap on interest claimable by UK companies that are part of a multinational group. This is restricted by reference to the group’s consolidated gross external finance costs and will apply to finance expenses payable in accounting periods beginning on or after 1 January 2010.
- The controlled foreign company rules have been changed to abolish the 'acceptable distribution policy' exemption (historically there was no charge if the foreign company distributed virtually all of its income back to the UK within a specified timeframe), and the exemption for non-local holding companies was repealed.
- The old Treasury Consent rules have been abolished and replaced with a new post-transaction reporting regime for transactions with a value of £100 million or more on or after 1 July 2009.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. If you would like to discuss the contents of this post with Cathy you can call her on 01908 605552.
Date: 6th January, 2010
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