Illustration - CFC

In this lesson

1. 0:00 CFC legislation and tax computation overview
2. 0:44 Calculating UK corporation tax on domestic profits
3. 1:17 Computing the CFC charge on diverted profits
4. 2:16 Applying double taxation relief to CFC income

About this lesson

You'll work through the step-by-step computation: identifying chargeable profits, applying ownership percentage, calculating the UK tax at the main rate, and claiming double taxation relief. This is essential for ATX (Advanced Taxation) and directly tested in corporation tax questions involving controlled foreign companies. The illustration uses Rogers Limited, a UK resident company with an overseas subsidiary in a low-tax jurisdiction, to show you how CFC legislation works in practice. You'll see how to isolate the profits that have been artificially diverted from the UK, apply the company's ownership stake, and then compute the corporation tax charge at 25%. The worked example also demonstrates how double taxation relief applies when comparing the UK tax rate against the overseas rate, reducing the overall CFC charge. By the end of this lesson, you'll be confident handling multi-step CFC computations and understand why associated companies affect the corporation tax rate. This is a high-value technique for passing ATX and managing real-world tax planning scenarios.

Duration: 3m