CIT Additional aspects Flashcards
How to treat pension contributions for companies?
These are deductible expenses for trading income. You are only able to deduct the amounts which have actually paid (not on whats accrued).
How do you treat property income for CIT purposes and how is it different for individuals?
- Accounted for on accrual basis always (IT its only if >150k)
- There is no 1k property allowance
- set off property losses against total income or surrender to the group.
- property interest is never allowable (residential r is for IT)
How to treat finance costs and finance income for CIT?
If trade-related include within NTLR, if trade-related interest include within trading income section.
What are the two forms of R&D expenditure that companies can undertake?
Capital expenditure;
Revenue expenditure
First thing to do in the question is to split the expenditure up in to revenue or capital expenditure.
What are the impacts of R&D capital expenditure for CIT purposes?
How should you treat it for the exam?
If you have expenditure on capital items, a FYA is given of 100% when calculating capital allowances.
If the capital item is a Special rate pool item always take this FYA of 100% as it is most tax-efficient over the ECA for SRP items (which is only 50%).
If the capital item is a main rate pool item, instead claim the ECA of 130% first as it is
What are the impacts of R&D revenue expenditures for SME companies?
SME companies can deduct fully (at 100%) qualifying R&D expenditure, in addition to an extra 130% deduction of this amount.
How do you treat R&D revenue expenditure for SME companies that was subcontracted?
If subcontractor is connected co:
You may claim 100% deduction on the expense (cost of employing subcontractor) of hiring the subcontractor, in addition to the 130% extra deduction from trading income
If the subcontractor is unconnected:
You may claim 100% deduction of the expense (cost of employing subcontractor) of hiring the subcontractor, in addition to an extra 65% of 130% of the expense incurred by the subcontracted company (ie you might pay the subcontractor 100k but the subcontractor might only incur 80k).
What is the impact of R&D revenue expenditure for Large companies?
Large companies would be eligible for an RDEC credit.
This means you must add 13% of the R&D expense to the taxable income, and then at the end when you have the tax liability figure, deduct the same 13% amount from the tax liability.
