Corporation Tax Act 2010 section 279B

Company with only ring fence profits

Section 279B provides marginal relief from corporation tax for UK-resident companies whose augmented profits fall between the lower and upper limits and consist entirely of ring fence profits (broadly, profits from oil and gas extraction in the UK and UK Continental Shelf).

• The section applies to UK-resident companies that are not close investment-holding companies, whose augmented profits exceed £300,000 (the lower limit) but do not exceed £1,500,000 (the upper limit), and whose augmented profits consist exclusively of ring fence profits.
• Corporation tax on the company's taxable total profits is reduced using the formula: R × (U − A) × (N / A), where R is the ring fence marginal relief fraction, U is the upper limit, A is the augmented profits, and N is the taxable total profits.
• The ring fence marginal relief fraction is fixed at 11/400ths (i.e. 2.75%).
• The effect of the relief is to ease the transition between the small profits rate and the main rate of corporation tax for companies with only ring fence profits, so that the tax charge increases gradually as augmented profits rise from the lower limit towards the upper limit.