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!
Remember if they give LEASE PREMIUM
Just take the yearly
Proforma
Operating profit
D&A
Other costs such as leasing
LEASE PREMIUM MINUS
CA MINUS
TATP
Chargeable gains
Property Income
Interest Income - ignored for the purposes of relief!
Total profit
LESS: Group relief
Repairs SBA REMEMBER
If repairs are required to bring dilapadated to normal, this is qualifying for SBA and can’t be claimed in full. Only SBA from the date it was available for use - E.g. E-Commerce
