Direct Tax Acts, Finance Act 2018

440 Surcharge on undistributed investment and estate income
CTA76 s101; FA90 s47; FA97 s146(1) and Sch9 PtI par10(4); FA00 s69; FA01 s91; FA03 s163 and Sch6; FA13 s33(1); FA17 s75 and Sch3(d)

(1) (a) Where for an accounting period of a close company the [distributable estate and investment income]1 exceeds the distributions of the company for the accounting period, there shall be charged on the company an additional duty of corporation tax (in this section referred to as a “surcharge”) amounting to 20 per cent of the excess.

(b) Notwithstanding paragraph (a)

(i) a surcharge shall not be made on a company where the excess is equal to or less than the lesser of the following amounts –

(I) [€2,000]2 or, if the accounting period is less than 12 months, [€2,000]3 proportionately reduced, and

(II) where the company has one or more associated companies, [€2,000]4 divided by one plus the number of those associated companies or, if the accounting period is less than 12 months, [€2,000]5 proportionately reduced divided by one plus the number of those associated companies;

(ii) where the excess is greater than the lesser amount on which by virtue of subparagraph (i) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to 80 per cent of the amount by which the excess is greater than that lesser amount.

(2) Where the aggregate of –

(a) the accumulated undistributed income of the company at the end of the accounting period, and

(b) any amount which, on or after the 27th day of November, 1975, was transferred to capital reserves or was used to issue shares, stock or securities as paid up otherwise than for new consideration (within the meaning of section 135) or was otherwise used so as to reduce the amount referred to in paragraph (a),

is less than the excess referred to in subsection (1), that subsection shall apply as if the amount of that aggregate were substituted for the excess.


(3) In applying subsection (1) to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded.

(4) In determining how many associated companies a company has in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and 2 or more associated companies shall be counted even if they were associated companies for different parts of the accounting period.


(6) A surcharge made under this section on a company in respect of an accounting period (in this subsection referred to as “the first-mentioned accounting period”) –

(a) shall be charged on the company for the earliest accounting period which ends on or after a day which is 12 months after the end of the first-mentioned accounting period, and

(b) shall be treated as corporation tax chargeable for that accounting period;

but where there is no such accounting period so ending, the surcharge shall be charged for, and treated as corporation tax of, the accounting period in respect of which it is made.

[(7) The provisions of the Corporation Tax Acts relating to –

(a) assessments to corporation tax, and

(b) the collection and recovery of corporation tax,

shall apply in relation to a surcharge made under this section as they apply to corporation tax charged otherwise than under this section.]8

Go to Revenue Guidance Notes on TCA


1 Substituted by FA01 s91(2) and applying as respects an accounting period ending on or after 14 March 2001

2–5 Substituted by FA13 s33(1) and having effect in relation to accounting periods ending on or after 1 January 2013

6 Deleted by FA03 s163 and Sch6 and deemed to apply to accounting periods ending on or after 14 March 2001

7 Repealed by FA00 s69 and applying

for income tax, from 6 April 1999

for corporation tax, in respect of accounting periods commencing on or after 6 April 1999.

8 Substituted by FA17 s75 and Sch3(d) and taking effect on the passing of Finance Act 2017 – 25 December 2017

Sections referred to in text

section 135 [Distributions: supplemental]

Cross references

176 Purchase of unquoted shares by issuing company or its subsidiary

243B Relief for certain charges on income on a value basis

396B Relief for certain trading losses on a value basis

434 Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc

441 Surcharge on undistributed income of service companies

448 Relief from corporation tax

486C Relief from tax for certain start-up companies

508U Assessments for withdrawing relief claimed under Chapter 4 - company

644C Relief from corporation tax for losses from dealing in residential development land

697H Relevant shipping income: distributions of overseas shipping

734 Taxation of collective investment undertakings

Sch 32 Transitional Provisions

Revenue Guidance

Surcharge on certain undistributed income of close companies – eBrief No. 207/18