Corporation tax legal definition of corporation tax
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corporation tax a tax on the worldwide profits of UK resident companies and on the profits of non-resident companies from trading operations in the UK. Profits are measured for accounting periods and include both income and capital profits. In broad terms, income is measured using income tax principles and capital profits are calculated using capital gains tax principles but with INDEXATION ALLOWANCE instead of TAPER RELIEF. The rates of corporation tax vary according to the level of profits and are set for each FINANCIAL YEAR ending on 31 March with the accounting period profits apportioned where that period does not end on that date. Special rules apply to groups of companies to permit losses of one group member to be surrendered to another and for capital assets to pass within the group without triggering a disposal for CAPITAL GAINS TAX.