Corporation Tax Act 2010 section 20

Company with only ring fence profits

Section 20 provides the rules for marginal relief where a company's augmented profits consist entirely of ring fence profits (that is, profits from oil extraction activities in the UK and UK Continental Shelf).

• This section applies the marginal relief rules specifically to companies whose augmented profits are made up solely of ring fence profits.
• The three basic conditions for marginal relief are the same as those set out for standard marginal relief under section 19, but here the augmented profits must be exclusively ring fence profits.
• Where these conditions are met, the calculation uses a special "ring fence fraction" instead of the standard fraction normally used in the marginal relief formula.
• This ensures that oil and gas companies with only ring fence profits receive the appropriate rate of marginal relief, reflecting the different tax regime that applies to such activities.