Taxation in the United Kingdom/Legislation/Section 6 of the Income and Corporation Taxes Act 1988

This section sets out the general rubric of the charge to corporation tax.

Subsection (1) raises the charge on profits of companies. Profits are defined in Subsection (5), company is defined in Section 832 of the Income and Corporation Taxes Act 1988 (ICTA). This definition includes overseas companies, and it is left to Section 11 of ICTA to restrict the scope of the charge for overseas entities.

Tax is charged, and the Corporation Tax Acts apply for any Financial year for which Parliament charges corporation tax. The wording is formulated in this way because corporation tax, like income tax, is still a temporary tax which must be imposed annually, although in practice it is inconceivable that a Parliament will fail to levy the tax.

Subsection (2) provides that where a company is UK resident (and so within the full charge), or overseas resident but not scoped out of the charge to corporation tax by Section 11 of ICTA, the Income Tax Acts (and therefore the charge to income tax) do not apply.

Subsection (3) removes any charge to capital gains tax on gains on which it is charged to corporation tax or would be so chargeable but for an exemption from corporation tax.

Subsection (4) defines "profits" and widens the meaning of "trade" for the purposes of Sections 7 to 12, 114, 115 (subject to 115(7)) and 248, and Part VIII, Chapter IV of Part X, and Part XI, except where the context requires otherwise. Profits are defined as income and chargeable gains. Trade is taken to include vocation, and to include an office or employment.

Subsection (4A) extends the meaning of profession to include vocation in Sections 74(1), 79(1), 79A(1), 79B(1), 83A(1), 84(1), 86(1), 86A(2)(a), 87(1), (2) and (4), 88, 89, 90(1) and (3), 94(1), 100(2)(b), 101, 102, 401(1), 491(10), 577(7)(b), 579(2), 588(3), 589A(8) and 817(2), and in paragraph 5(11) of Schedule 30.

Subsection (5) notes that Part VIII contains general provisions relating to the taxation of profits of companies.