Taxes Consolidation Act 1997 Schedule 32 paragraph 4

Meaning of "Relevant Distributions" for the Purposes of Section 147 in Relation to Distributions Made Before 6th April, 1989

Paragraph 4 of Schedule 32 defined "relevant distributions" for the purposes of section 147 in relation to distributions made before 6 April 1989, using the concept of a "primary fund" of income taxed at a reduced rate.

• The primary fund was broadly a pool of a company's profits taxed at the effective 10 per cent rate, less the tax on those profits, plus dividends received carrying a reduced tax credit of 1/18th.
• Distributions paid out of the primary fund were known as "relevant distributions" and carried a reduced tax credit of 1/18th rather than the standard tax credit.
• Where a company's distributions exceeded its primary fund, the excess was treated as a separate distribution carrying the standard tax credit applicable at the time of payment.
• The primary fund concept applied only for the period from 1 January 1981 to 5 April 1989 and was repealed with effect from 6 April 1989.