(1) That paragraph (1) of Rule 4 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918,—
(a) so far as it provides that corporation profits tax paid by a company in respect of any accounting period is, in computing for purposes of income tax the profits or gains of the company, to be allowed to be deducted as an expense incurred in that accounting period, shall not apply where the computation is for purposes of income tax for the year 1961-62 or for any subsequent year of assessment, and
(b) so far as it provides that, where any amount previously paid by way of corporation profits tax is repaid, the amount repaid is to be treated as profit for the year in which repayment is received, shall not apply save where there has been an allowance of the deduction of an amount as an expense in computing profits or gains for purposes of income tax.
This is the Resolution that deals with company taxation. Deputies are aware that at the present time companies pay corporation profits tax on profits over £2,500 and the amount paid is deducted from their profits before they pay income tax. It is proposed to remove the deductibility so that companies will pay income tax on their full profits. There are about 8,000 companies liable to income tax but of these about 1,600 are not liable to corporation profits tax and they will get the benefit of the reduction in income tax. Of that 1,600, only about 135 will lose on this transaction. The remainder of the 1,600 will gain something.