Corporation Tax Act 2010 section 21

Company with ring fence profits and other profits

Section 21 explains how marginal relief is calculated when a company has both ring fence profits (from oil and gas extraction activities in the UK and UK Continental Shelf) and other non-ring-fence profits.

• This section applies when a company has both ring fence profits and other profits, and its total augmented profits (combining both types) fall within the marginal relief band.
• The same three qualifying conditions that apply for standard marginal relief (as set out in section 19) must be met, but here the augmented profits figure includes both ring fence and non-ring-fence profits added together.
• The marginal relief deduction is split into two separate parts: one part calculated on the ring fence amount (dealt with in section 22) and another part calculated on the remaining non-ring-fence amount (dealt with in section 23).
• This two-part approach ensures that the different corporation tax rates applicable to ring fence profits and other profits are each properly reflected in the marginal relief calculation.