How should I treat exempt distributions received from another company on a CT600 (previously called Franked Investment Income)?

Franked Investment Income (FII) is the former name for UK dividends that a limited company receives from another company. Depending on whether this income is detailed within the profit of your financial statements, there are two possible ways to list this information on the CT600 tax return. Please follow the below steps:

Please Note: FII usually is not included when calculating corporation tax because this would tax the dividend twice. This is because the company issuing the FII has already paid corporation tax on it. Therefore the most common scenario would be the first scenario where the dividend is included in the company accounts and two entries therefore would be required. 

SimpleStep

CT600 Core > Trade and Professional income > Tax adjusted profit/(loss)worksheet – other adjustments

• Review the value presented in Profit/(loss) after adjustments for disallowable expenditure b/fwd
  • If this contains the dividend income that is exempt, enter the dividend value into the row labelled Net dividends received from other companies which will reduce the profits being charged to corporation tax.
    Please note: by completing this box, Box 620 will automatically update with the same value. Please review and ensure that only the required value is inserted
  • If the dividend is not included in the profit at the top of the screen and you are simply wanting to declare the entry for HMRC's review then you should only complete box 620.

HMRC Forms

CT600 Core > Computations > Tax adjusted profit/(loss)worksheet – other adjustments.

• Review the value presented in Profit/(loss) after adjustments for disallowable expenditure b/fwd
• If the profit has dividends included and they are not taxable, the value needs to be included in the row labelled 'Net dividends received from other companies' box. This will remove the profit as needed. 
  Please note: by completing this box, Box 620 will automatically update with the same value. Please review and ensure that only the required value is inserted 
• If the dividend is not included in the profit at the top of the screen and you are simply wanting to declare the entry for HMRC's review then you should only complete box 620.