Taxation in the United Kingdom/Legislation/Section 9 of the Income and Corporation Taxes Act 1988

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Subsection (1) provides that corporation tax is charged under income tax principles, unless there is a provision to the contrary, and for these purposes the corporation tax term "accounting period" is taken to be the period of reference rather than the income tax term "Year of assessment". This provision derives from when corporation tax was first introduced in 1965 (prior to which companies were charged to income tax). Since 2003, various parts of the Income Tax Acts have been rewritten so that the same provisions no longer apply for both income tax and corporation tax. This process is not yet complete, but by the end of the decade, corporation tax should be a completely stand-alone tax, no longer relying on income tax provisions for its base.

Subsection (2) makes it clear what income tax law applies for each accounting period, and also that provisions relating specifically to individuals do not apply to persons within the charge to corporation tax.

Subsection (2A) provides that corporation tax on income is not charged under the Income Tax (Trading and Other Income) Act 2005 (ITTOIA). Subsection (2B) goes on to provide that instead income is chargeable under Schedule A and Schedule D and the Cases of Schedule D. Subsection (2C) also deems Schedules A and D to apply to income tax for the purposes of corporation tax. In essence, these subsections contain transitional provisions that apply whilst corporation tax law is being decoupled from income tax law - once the decoupling is complete, they will no longer be necessary.

Subsection (3) provides that total profits are assessed under and computed under the rules in Schedule A and Schedule D and also under Parts 2 (employment income), 9 (pension income) and 10 (social security income) of ITEPA (which impose the charge to income) tax plus chargeable gains.

Subsection (4) provides that where a provision of the Income Tax Acts apart from ITTOIA provides for an exemption from income tax, or charges a person to income tax, then unless otherwise provided, there is a similar exemption from or charge to corporation tax.

Subsection (5) makes it clear that although corporation tax and income tax are distinct taxes, the same statutory provision may apply to them. This also allows certain provisions to ensure tax neutrality between persons within the charge to corporation tax and income tax by being a rule for corporation tax as far as the former is concerned, and a rule for income tax as far as the latter is concerned. A charge to corporation tax (or income tax) is a charge to the other, and an exemption from corporation tax (or income tax) is an exemption to the other, unless expressed explicitly to the contrary.

Subsection (6) states that the Income Tax Acts referred to in the section are to be taken as excluding Section 1 to 5, Part VII or Sections 348 to 350 of ICTA, and notes that the above rules do not refer to which period income are taxed in, except to the extent that this results from apportioning income of the whole period to different parts of a period.