Corporation Tax Act 2010 section 279A

Corporation tax rates on ring fence profits

Section 279A sets out the two rates of corporation tax that apply to ring fence profits (broadly, profits from oil and gas extraction activities in the UK and on the UK continental shelf) and the conditions under which each rate applies.

• Ring fence profits are normally charged to corporation tax at the main ring fence profits rate of 30%
• A reduced small ring fence profits rate of 19% applies where the company is UK resident, is not a close investment-holding company, and its augmented profits do not exceed the lower limit of £300,000
• The main ring fence profits rate of 30% is significantly higher than the standard corporation tax rate, reflecting the additional tax burden on oil and gas extraction profits
• Whether the 19% or 30% rate applies depends on the level of the company's augmented profits in the accounting period, not just its ring fence profits alone