CH13 - Corporation Tax Flashcards
Period of Account vs Accounting Period
Period of Account = period of which prepares accounts, usually 12 months, but can be shorter or longer
Accounting Period = period for which corporation tax is charged. Never more than 12 months.
Tax residence of an incorporated company
Incorporated in UK = UK resident
If Incorporated overseas:
If board meetings held in UK = UK resident
If held abroad = Not UK Resident
If held abroad but directors live in UK = UK resident
Total Taxable Profit Proforma
Tax adjusted trading profit
Interest income
Property Income
Misc income - IGNORE DIVIDENDS
Chargeable gains
Total Profits
Less: Qualifying Charity Donations (QCD)
Taxable Total Profits (TTP)
Corporation Tax Proforma
TTP * Corp Tax rate
Less: Marginal reliefs (If applicable)
Marginal Relief Yes or No
If Augmented profits are between £50k and £250k
This is time apportioned for the profit
Rate of Corp Tax
If Augmented Profit lower than £50k = 19%
If Augmented Profit between £50k and £250k = 25% minus relief
If Augmented profit above £250k = 25% no relief
These are all for only 12 months!!
Augmented Profit Formula
TTP
Plus Dividends received
EQUALS Augmented Profit
If FY Straddles FY22 and FY23
FY22 is 19% - Remember FY22 is March 22-23
Corporation Tax date
1st April - 31st March
Capital Allowances - AIA and ECA
AIA is the same as individual - $1m
ECA is 130% super deduction for the main pool
50% FYA for special rate pool - same as main allowance for corporations
Disposals on ECA claimed
If disposal on 50% FYA - balancing charge using the formula:
proceedsproportion of expenditure on which FYA claimed50%
Disposals how to:
If disposal is $750k and FYA balance was used, the $750k is split between the proceeds relating to the FYA amount as an allowance,
and the rest is treated as a balance of proceeds on the special rate pool
Loan Interest Receivable/Payable
Non Trade Purpose:
Interest receivable:
Interest on bank accounts, and investments = gilt/loan notes
Interest payable:
On a loan to purchase a commercial property
On a loan to acquire shares of a company
Proforma - Interest Payable/Receivable
Interest receivable = removed
Interest payable = added back
Remember re losses and interset
Always relieve losses across the group and remember the proforoma
Corp tax still on interest income minus QCDs!
