FAQs Non-Corporate Distributions Rate (NCDR)

• How do I enter non-corporate distribution data?

Select Edit | Non-Corporate Distributions to enter the data for non-corporate distributions.

• I calculate the underlying rate for a client to be 17.7891%, why is this being rounded to 17.78% rather than 17.79%?

Revenue systems are designed to take an underlying rate calculation to 2 decimal places. To reduce rounding problems the Inland Revenue has not introducing any rounding whatsoever so:

18.99 or 18.9999999999999999 will both be 18.99%,

19.01111111 and 19.0199999999 will both be 19.01%.

• The profit for this company is between £49,933 and £50,000.  Why is the computation calculating the non-corporate distributions rate but then using the small company rate of tax less marginal relief?

Where the profit is between £49,933 and £50,000 applying the strict interpretation of the law would give a result of a higher figure for the underlying rate. However, the practice of truncating rather than rounding the underlying rate introduces anomalous results so that the 'NCD' and 'underlying' tax calculations work out less than the profits at small companies' rate less marginal rate relief.

In this circumstance following the guidance on the CT600 means that the figure from box 65 should be used as the corporation tax chargeable. The corporation tax computation has been enhanced to reflect this requirement.

• The company has paid non-corporate distributions that are less than the company's profits but the profit is being taxed at 19% rather than at a mix of 19% and the underlying rate.  (Click again to close)

The non-corporate distributions rate applies if the company's underlying rate of tax is less than 19%. Check to see if any of the following could result in the company paying tax at 19% in spite of apparently low profits:

• • The company has a short period - then the upper and lower limits should be time apportioned.

  • The company has associated companies -  then the upper and lower limits should be divided by the total number of associated companies.

  • The company has received franked investment income - then when this is added to the basic profit does the total exceed the limits?

• There is a warning on the computation regarding NCDs entered in Business Tax not matching those in Accounts Production but some/all of the NCDs were paid after 1 April 2006. How do I stop the warning from appearing?

Select Edit | Non-Corporate Distributions and tick the 'suppress warnings' field.

• What do I do if I have paid a non-corporate distribution after 31st March 2006?

If a non-corporate distribution was paid after 31st March 2006 then this does not need to be disclosed within Business Tax.