What does section 627 of the Corporation Tax Act 2010 do?

Section 627 is an interpretation provision that ensures references to the 'main rate of corporation tax' in the chapter also cover companies charged at the standard small profits rate, the main ring fence profits rate, or the small ring fence profits rate. It maps the chapter's general language onto the specific rates actually applying to a company's profits.

How does section 627 apply to marginal relief fractions?

Where corporation tax is reduced by a marginal relief fraction — either the standard or ring fence version — section 627 extends references to the main rate of corporation tax to include that fraction. The terms 'fixed' and 'proposed' used in the chapter are also to be read as applying to the marginal relief fraction as set by Parliament.

Which special rates of corporation tax does section 627 cover?

Section 627 applies where profits are charged at the main ring fence profits rate, the standard small profits rate, or the small ring fence profits rate. It also covers situations where tax is reduced by the standard marginal relief fraction or the ring fence marginal relief fraction, ensuring the chapter's provisions function correctly for all these scenarios.

Why is section 627 important for companies with smaller profits?

Without section 627, the chapter's references to the main rate of corporation tax would only point to the single headline rate and would not properly cover companies paying tax at a lower small profits rate or benefiting from marginal relief. Section 627 ensures all general provisions in the chapter operate by reference to the actual rate or fraction relevant to that company.

Corporation Tax Act 2010 section 627

Meaning of "rate of corporation tax" in case of companies with small profits

Section 627 clarifies what "rate of corporation tax" means for the purposes of this chapter when a company's profits are not simply charged at the standard main rate, but instead attract one of the special rates or reliefs available to companies with smaller profits or ring fence profits.

The section applies where a company's profits for a financial year are charged at the main ring fence profits rate, the standard small profits rate, or the small ring fence profits rate, or where tax is reduced by a marginal relief fraction.
Where profits are charged at any of these special rates, references in this chapter to the "main rate of corporation tax" should be read as references to whichever special rate actually applies to those profits.
Where corporation tax is reduced by a marginal relief fraction (either the standard or ring fence version), references to the main rate of corporation tax also include references to that fraction, with "fixed" or "proposed" read as applying to the fraction as well.
This ensures the chapter's provisions work correctly for companies that do not simply pay corporation tax at the single main rate, by mapping the chapter's general language onto the specific rates and fractions that actually apply.

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