When companies pay dividends to shareholders, they must also pay to the Revenue Advance Corporation Tax (ACT), effectively a payment on account of the shareholders tax due on the dividend, and the company's corporation tax.
An installment of UK Corporation tax, required under UK tax rules. It represents a minimum tax on companies that earn most of their profits overseas.
Early instalment of UK corporation tax. It forms a minimum tax on companies that earn most of their profit overseas.
No direct US equivalent. Tax paid on company distributions recoverable from UK taxes due on income
An advance payment of UK tax that was made when dividends are paid. No direct US equivalent.
No direct US equivalent. Tax payable on cash dividends treated as advance payments on the company's UK income tax due
When a company paid a dividend it also paid a percentage of the amount of the distribution to the Inland Revenue as ACT. The company could then set off the amount of ACT against its liability to mainstream corporation tax. ACT was abolished on 31st March 1999.
Also known as ACT. Corporation tax liabilities are normally payable nine months after the end of the chargeable accounting period to which they relate. However, where a company pays a dividend to shareholders it is obliged to pay some corporation tax in advance of this date. The amount of ACT payable is calculated as the net dividend paid by the company multiplied by the fraction 20/80 or 25%. Having paid the ACT, the company is then allowed to deduct the ACT from its mainstream corporation tax liability, thereby reducing the amount payable after the year end.