Introduction Overview Section 18: Profits charged at the small profits rate
74.This section sets out the three conditions for the small profits rate to apply. It is based on section 13 of ICTA.
75.The first condition is that the company is resident in the United Kingdomin the accounting period. If a company becomes, or ceases to be, resident in the United Kingdom an accounting period ends (see the rules about accounting periods in section 10 of CTA 2009). So the effect of this condition is that the company must be resident in the United Kingdomthroughout the accounting period.
76.Some non-resident companies trading in the United Kingdom through a permanent establishment may be entitled to the small profits rate as a result of a provision of a DTA.
77.The second condition is that the company is not a “close investment-holding company”. That expression is defined in section 34.
78.The third condition is that the “augmented profits” (defined in section 32) of the company do not exceed the lower limit. If the profits fall between that limit and the upper limit, marginal relief may be due in accordance with section 19.
79.This section does not include a requirement that the company should make a claim for the relief. See Change 1 in Annex 1.