Franked investment income are dividends and other distributions from British companies that are received by other companies. The principle of the imputation system of taxation is that once one company has paid corporation tax, any dividends it pays can pass through any number of other companies without carrying a further corporation-tax charge, hence the term 'franked'. Thus franked investment is exempt from corporation tax in the recipient company; moreover, the amount of tax credit included in the franked investment income can reduce the amount of advance corporation tax that the recipient company has to pay on its own dividends. Research Franked Investment Income
A franked payment is a dividend or other distribution from a British company together with the amount of advance corporation tax attributable to the dividend. Thus, if the basic rate of income tax is 30%, a franked payment is the dividend actually paid plus 3/7 of it, i.e. it is a grossed-up dividend. In any accounting periodadvance corporation tax is actually paid on franked payments less franked investment income at the basic rate of income tax. Research Franked Payment
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Matt and Leela Probert
Abbreviations
Research Franked Investment Income
