Income Tax Act 2007 section 276

Conditions relating to income

Section 276 sets out how a company's income is calculated for the purposes of the nature of income condition and the income retention condition, and provides certain exemptions from the income retention condition.

• When calculating a company's income for these conditions, any debtor loan relationships must be excluded, and any net surplus of non-trading derivative contract credits over debits is treated as income from shares or securities.
• The income retention condition does not apply if the amount the company would need to distribute to satisfy it is less than £10,000 (proportionately reduced for periods shorter than 12 months).
• The income retention condition is also disapplied where the company is legally required to retain income exceeding 15% of its income from shares or securities.
• However, the legal restriction exemption is lost if the company retains more than the law requires and the combined total of that excess plus any distributions is at least £10,000 (or a proportionately reduced amount for shorter periods).