Corporation tax is a tax levied on the trading profits and other income of companies and other incorporated bodies. The rate of corporation tax is set in Britain by the Chancellor in his Budget. Corporation tax is paid in two parts: advance corporation tax and mainstream corporation tax. Of particular interest is the relationship between corporation taxes on companies and income taxes on their individual shareholders. In ' classical' corporation- tax systems, corporation tax is levied on the company and then, from what remains, dividends are paid to shareholders, who are again taxed in full by means of income tax. In imputation systems, such as that used in the UK, part of the company's corporation tax is effectively treated as a payment on account of the shareholders' income tax on their dividends. Research Corporation Tax
Mainstream corporation tax (MCT) is the liability for corporation tax of a company for an accounting period after the relevant advance corporation tax (ACT) has been deducted. In the imputation system of corporation tax in Britain, payments on account of ACT are paid when dividends are paid to shareholders. Mainstream corporation tax is the balance remaining to be paid. Research Mainstream Corporation Tax
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Abbreviations
Research Corporation Tax
