Corporation tax Flashcards
Who is chargeable to corporation tax?
Income and gains of a company
Is company residence a factor in charging corporation tax?
Company is liable on its worldwide profits if it’s resident in the UK
What makes a company resident in the UK?
It’s incorporated in the UK
Central management and control are exercised in the UK
How long is a company’s accounting period?
12 months
Are dividends allowable as a trading expense in the calculation of its trading income?
Not allowable
Are private use adjustments present in capital allowance computations for companies?
No, they are never included
What assumption is made regarding dividends?
All dividends received by a company are exempt
What is the rate of corporation tax?
<£50k: TTP x 19%
£50k to £250k: TTP x 25% - marginal relief
> £250k: TTP x 25%
What are augmented profits ?
Taxable total profits plus exempt ABGH distributions.
Compared with the limits of £1.5million and £20million
Limits are adjusted down for periods of less than 12 months.
What are exempt AGBH distributions?
Includes dividends from UK and overseas companies other than those within 51% group.
When is the due date for the CT of non-large companies?
Due date is 9 months and 1 day after the end of the chargeable accounting period.
Non large has augmented profits less than £1.5 mil
When is the due date for the CT of large companies?
Large company has augmented profits between £1.5million and £20million
Installments due on 14th of months 7,10,13,16 of the accounting period
When is the due date of CT for very large companies?
Companies with augmented profits exceeding £20million
Installments due on 14th of months 3,6,9,12 of the accounting period
Is a Uk resident company chargeable on WW profits?
Yes
How are charity donations handled?
Add back entire amount to trading income
Qualifying donation deducted from TTP
Do there need to be any adjustments for private use with CT?
NO
How are dividends handled when calculating trading income?
Deduct from trading income
0 when calculating TTP
How is depreciation handled?
ALWAYS ADD BACK
What is the formula for calculating marginal relief?
(U-A) x N/A x 3/200
U=250k
A=augmented profits
N=TTP
If a company makes between £250k and £50k how is it taxed?
TTP x 25% - marginal relief = CT liability
How are wages treated when calculating trading income?
Allowable - do nothing/deduct
How is property income handled?
Remove from trading income
Add back in TTP
How are profits on disposal treated?
Deducted from trading income
Calculate chargeable gain
Add back chargeable gain to TTP
How is interest receivable dealt with?
Assume NTLR
Remove from trading income
Add back to TTP
How is interest payable dealt with?
When non-trading
Add to trading income
Take away from interest receivable to calculate NTLR
Are dividends from subsidiaries included in calculating augmented profits?
No so deduct
How are bands adjusted when considering subsidiary companies?
Divide band by number of companies
When can a company be said to have begun trading?
If they’ve opened a interest bearing bank account as they are gaining an income via interest
