Corporation Tax Act 2010 section 633

Exemption for interest on overpaid tax in final accounting period

Section 633 provides a limited corporation tax exemption for small amounts of interest received on overpaid tax during a company's final accounting period, where the company is being wound up or is in administration.

• When HMRC repays overpaid tax to a company in its final accounting period, any interest paid on that overpayment may be exempt from corporation tax, provided it does not exceed £2,000.
• The exemption applies only to interest received or receivable under the statutory provisions for interest on overpaid tax (section 826 of ICTA).
• For a company being wound up, the final accounting period is the one that ends when the winding up is completed; for a company in administration, it is the last accounting period before the dissolution event.
• Where the conditions are met, the interest is completely excluded from the company's income for corporation tax purposes, meaning no tax is due on it.