The basic rule is that a company's unrelieved surplus ACT is set against its mainstream corporation tax liability for an accounting period beginning after 5 April 19991. It must be set off as far as possible in the earliest such accounting period2. The corporation tax liability for this purpose includes any liability in respect of an apportionment of the profits of a controlled foreign company (CFC)3.
The amount which can be set against the mainstream corporation tax liability for an accounting period cannot exceed the set-off limit for that period less the amount of any shadow ACT set off (see D5.161)4.
Example 1
Omega Ltd makes up its accounts to 31 March.
At 31 March 2021 its unrelieved surplus ACT is £12,000. In the year to 31 March 2022 it has profits of £100,000 and pays a dividend of £60,000.
| £ | £ |
| Corporation tax at 19% | | 19,000 |
| Set-off limit (£100,000 × 20%) | 20,000 | |
| Less: Shadow ACT (£60,000 × 25%) | (15,000) | |
| Available for unrelieved |
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Web page updated on 17 Mar 2025 17:09