Taxes Consolidation Act 1997 Schedule 22 paragraph 5

Computing the aggregate income

Paragraph 5 of Schedule 22 sets out how to determine a company's income for a specified period by aggregating its trading profits, other income, and capital profits, and then deducting specified losses, allowances, and other amounts.

• A company's income for the specified period is the total of its trading profits (computed on Case I principles), any other income (including franked investment income), and any capital profits arising in that period, whether or not those capital profits are chargeable to tax.
• Deductions are made for trading losses of the period, group relief received, capital allowances (both historic income tax allowances carried forward from 1975–76 and corporation tax capital allowances for items such as industrial buildings, plant and machinery, mine development, patent rights, and scientific research), and for annual payments made under deduction of tax and charges on income allowed against profits.
• Where the company is not a securities dealer, and it has received a distribution, a deduction is made for the portion of that distribution (together with the corresponding tax credit) that would have been treated as trading income under section 752 had the company been carrying on a dealing trade.
• Where the company is not a securities dealer and has purchased securities at a price that includes accrued interest which would otherwise give rise to an artificial loss adjustment under section 749, a deduction is made for the gross amount of that accrued interest element.