1. Corporation Tax Flashcards
What’s the CT %
19%
Can you tax Corporation tax on dividends?
Taxable profits excluded dividends received from UK and overseas companies
For corporation:
Property income losses can be set against what years?
And if excess loss?
Property income losses can be set against current year total profits
- if excess loss = carry fwd against total profits
What date do you use for the indexation allowance for company
- from date of expense
- to the date of disposal
- or to December 2017 if earlier
For corporations companies:
describe the disposal of shares
1. What’s the share identification rules
- Same day
- FIFO on previous 9 days
- share pool
For corporations companies:
Describe the substantial shareholding exemption when disposing shares
1. % holding
2. Period of ownership
3. Type of company shares being disposed
4. What happens when there’s a gain?
5. What happens when there’s a loss?
- more than 10% holding
- 12 months out of previous 6 years
- The type of company shares being disposed of = trading company
- Gain = exempt fro CT%
- Loss = not allowable deduction
For corporations companies:
Is there any AEA OF £12,300 available?
No AEA for companies
For corporations companies:
Which following relief is available
- roll over relief
- Business asset disposal relief
- gift roll over relief
- private resident rolls over relied
Only relieve available to compare is roll over relief
BUT not available on goodwill for companies
For corporations companies:
How do you split long period of financial accounts
Split long financial account periods in to 2 accounting period
Accounting Period 1 : first 12 months
Accounting period 2: remainder of financial accounting period
For corporations companies:
With long periods of account, how many would you need of the following :
- payment days
- file date
- Two seperate payment dates
- One file date
For corporations companies:
- with long period of accounts
Describe the allocation of TTP for the following :
1. Adjusted trading profit before CAs
2. Capital allowances
- comps, AIA, WDA & FYA
3. Interest / property / other income
4. Chargeable gains
5. Qualifying charitable donations
For purposes of determining payment dates
6. Dividends received
- Adjusted ttp before ca = Time apportion
- Ca= seperate computation
Where AP less than 12 month: time apportion AIA, WDA but not FYA - Other income = time apportion
- Chargeable gains = according to date of disposal
- QCD= date paid
- Dividends received = date received
For corporations companies:
In regards to augmented profits
1. What’s the calculation
2. What’s the profit threshold
3. What happens if profits below the threshold
4. What’s happens if profits above the threshold
5. What dividends do you exclude to calculate augmented profits
6. What do you do with thr when there’s a short accounting period
7. What do you do with the thr if you’re in a 51% group company
- Taxable total profit + dividends received = augmented profits
- Compare augmented profits to profit thr of £1.5m
- If profits below £1.5m= normal due dates apply
- If profits above £1.5m :
- company = large
- & quarterly instalments apply - Exclude dividends from 51% group companies
- If there’s a short accounting period = time apportions the £1.5m thr
- If you’re in a 51% group company = divide the limit by the number of 51% group companies at the end of the previous Accounting period
For corporations companies:
Describe the quarterly instalments
1. Compulsory applicable to what size companies?
2. When is the 1st instalment
3. When is the subsequent instalment
4. What’s year is the CT liability based on
5. When is a large co. Above the thr £1.5m augmented profit not required to use quarterly instalment
- when corporation tax liability is less than ?
- if company was not large in the previous year AND augmented profit is below what amount?
- Large companies
- From the Start of AP, 7months + 14 days
- 3 months after
- Current year
- when CTL less than £10k
- augmented profit less than £10m
For corporations companies:
What’s the dates of the following
1. Corporation tax due date
2. File date
- @ End of the accounting period + 9months & 1day
(Unless large co. Where quarterly instalments are required) - @ end of accounting period + 12 months
For corporations companies:
What’s the calculation for double tax relief
Lower of overseas tax and UK tax suffered
For corporations companies:
In regards to capital allowance computation
1. Describe how cars are pooled according to their CO2 emissions
- second hand zero emission cars
- new zero emission cars
Second hand zero emission cars :
1-50g/km =main pool
Over 50g/km = SRP
new zero emission cars =
- FYA column
- 100% deduction
For corporations companies:
In regards to capital allowance computation
What’s the superdeduction
- which column
- % of addition deduction
- what time period is this available for
- under FYA Column
- 130% Superdeduction rather than AIA
- new main pool plant and machinery bought after 1st April 2021 - 31.3.2023
For corporations companies:
In regards to capital allowance computation
- how do you allocate plant and machinery not qualifying for enhanced capital allowances
- Allocate the reminding amount deducted after AIA
- to the SPR pool over MP
- coz SPR had WDA of 6% as opposed to 18% on MP items
For corporations companies:
In regards to capital allowance computation
What happens when expenditure qualifying for MP/ SPR exceeds the AIA
Eligible for a WDA of 6% / 18%
For corporations companies:
In regards to capital allowance computation
What’s the WDA % for :
- main pool
- special rate pool
- main pool = 18%
- special rate pool = 6%
For corporations companies:
In regards to capital allowance computation
- what happens to new special rate pool assets acquired between 1.4.21 and 31.3.23
- given AIA first @ 100%
- then to FYA @ 50%
For corporations companies:
In regards to capital allowance computation
What’s the maximum can be claimed for small pools WDA
Small pool WDA: can claim up to a maximum WDA of £1,000 but on the main pool / special rate pool only
For corporations companies:
In regards to capital allowance computation
Is private use asset pool relevant to comapanies
Private use asset pools not relevant to companies
For corporations companies:
In regards to capital allowance computation
Does the company have to claim all or any of the AIA or WDA
The company doesn’t have to claim all or any of the the AIA or WDA
For corporations companies:
Describe the structure and business allowance (SBAs)
1. Type Qualifying costs
2. Non- qualifying costs
3. Calculation
4. On disposal how does it effect the following individual:
- seller
- buyer
- -Construction of new non residential structures and buildings
- renovation / extension of existing buildings - Land, legal fees, stamp duty land tax, repairs and residential buildings
- Cost x 3% SL x time apportion from date brought into use
4.
Seller = no BA/BC, calc SBA time apportion to date of disposal, add SBAs claimed to proceeds for gains calculations
Buyer = SBAs on 3% of original cost for reminder of the period (from original purchase date)
For corporations companies:
Describe intangible assets (except goodwill)
1. Principle
2. Adjustment of profits
3. Disposal
- Follow accounting treatment
- No adjustments of profits, allow whatever charge in accounts UNLESS elect for 4% alternative deduction
- Profits on disposal on accounts = selling price - net book value = trading income ; so no adjustment of profit needed UNLESS 4% election made
For corporations companies:
For intangible assets except food will,
Describe what happens if the 4% elections is made
1. Add back or deduct amortisation in adjustment of profit?
2. What would you claim instead ?
3. On disposal what would you add back , and how would it be calculated
4. Is it irrecoverable or recoverable
5. When can you make the elections
- Add back the amortisation in adjustment of profit
- Claim the 4% WDA instead
- On disposal add back profit on disposal: selling price - TWDV = trading income
- Irrecoverable
- Working 2 years at the end of the purchased accounting period
For corporations companies:
Describe how goodwill is treated
1. Is amortisation / impairment losses allowable for tax purposes
2. What’s the calculation on disposal
3. If it’s a profit in disposal? Deferral?
4. If it’s a loss on disposal?
5. Can the loss be carried back?
- Amortisation / impairment losses related to goodwill = not allowable for tax purposes
- On disposal : selling price - cost = profit/loss
- Profit = trading profit
- deferral : Intangible roll over relief as for other IA assets - Loss = can be set agains
- total profit in Cg
- group relief - CF agains total profit - No carry back option
For corporations companies:
Describe the deferral of the special intangible roll over relief available
1. Time period of when new intangible asset is acquired
2. Max deferral amount calculation
- If a new IA bought within 12 months before and 36 months after
- Max deferral
= lower of
selling price
Amount reinvested
Less: cost of original intangible asset
For corporations companies:
Describe R&D
1. Examples of type of Qualifying expenditures
2. % cost of subcontractor payment qualifies
3. What type of company is relief available to
4. What’s the addition allowable deduction %
5. What’s the repayment amount if co. Is loss making and surrender loss
6. What if it’s a capital expenditure for R&D
- Staffing costs, agency staff, materials, water, fuel and power, software, subcontractor payments
- 65% of subcontractor costs qualifies
- SMEs
- Additional allowable deduction of 130%
- 14.5% x lower of
- trading loss
- 230% x qualifying r&d expenditure - 100% FYA but no additional deduction
