Chapter 20 - Additional Aspects of Corporation Tax

Question 1

To maximise the amount of DTR, how should QCDs be offset against UK and overseas income?

Answer 1

Offset against UK income first, and then against overseas income.

Question 2

How can companies take a deduction against pension contributions in a period?

Answer 2

They can take a deduction against pension contributions that are PAID, NOT accrued.

Question 3

Is ammortisation of goodwill an allowable expense?

Answer 3

No

Question 4

What is the tax treatment for intangible fixed assets used in the trade?

Answer 4

Generally the same as the accounting treatment.

Question 5

What is the general rule used when determining if intangible fixed assets are allowable?

Answer 5

Trade (allowable) vs Non-Trade (disallowable)

NOT Capital vs Revenue

Question 6

What is the relief for R&D capital expenditure for small and large companies?

Answer 6

100% first year allowance (capital allowance) excluding land.

Question 7

What is the relief for R&D revenue expenditure for SMEs?

Answer 7

130% super deduction vs trading profits.

230% deduction total including the normal initial deduction

Question 8

What is the relief for R&D revenue expenditure for large companies?

Answer 8

“Above the line tax credit”. (RDEC)
Can elect to apply a tax credit regime against their R&D revenue expenditure:
12% against qualifying R&D rev exp incurred pre April-2020.
13% against qualifying R&D rev exp incurred on/after 1 April 2020.
Tax credit is treated as taxable income (increases taxable income), then deduct the credit from their corp tax liability.

Question 9

What are some examples of qualifying R&D revenue expenditure?

Answer 9

Staff directly/indirectly engaged on R&D.
*External staff provider who provides staff for direct engagement on R&D (only 65% of these costs qualify for special reliefs).
Consumable of transformable materials.
Computer software.
Power/water/fuel
*Expenditure of same nature subcontracted by SME.