Corporation Tax Flashcards
How much will a company with profits of £50,000 or lower pay in corporation tax?
19%
How much will a company paying full rate corporation tax have minimum in profits?
£250,000 to pay the full rate of 25%
Why might a company incorporate?
So a director can pay themselves dividends. Which attracts lower rates and doesn’t pay NIC.
Who’s responsibility is it to set up a company to pay corporation tax?
The company not the HMRC.
How long does a company have to amend their self-assessment return?
Within 24 months of the end of the trading period, the return relates to.
Regarding records, what must a company do?
Maintain records to draw up a tax return and pay corporation tax due within 9 months and 1 day of the accounting period.
The tax return can be filled 12 months after the accounting period.
What special rules apply to the first year of trading?
Do not have to stick to the 12 months trading year in order to allow a date to be chosen.
This will lead to 2 tax returns in one year if it results in less than 12 months.
How does tax liability work for overseas aspects?
UK companies trading abroad pay corporation tax on worldwide profits.
Overseas companies selling in the UK pay tax on profits attributable to that branch.
What is the rule for deducting business expenses from corporation tax?
Must be done wholly and exclusively.
Ie paying a large pension to a spouse would fail.
What expenses would not be allowable for corporation tax
Entertaining expenses.
What other allowances and reliefs other than expenses might be available for corporation tax?
Capital allowances
R&D relief
The patent box
Reliefs for creative industries
Disincorporation relief
How do capital allowances work?
Allowances to cover the cost of equipment, machinery, or business vehicles.
Full first year allowance or writing down allowance where a percentage is written off each year to cover the life of the equipment.
What changes were made to capital allowances in April 2013?
Full expensing 100% first-year relief for qualifying companies
50% first year allowance for expenditure
Annual investment allowance provides 100% first-year for palnt and machinery investment up to £1m for ALL companies.
What is the patent box?
Where a company makes profit from selling patintent invesions
What rule needs to be known about close companies?
Where a loan is made from the company to a participator, 25% tax applies chargeable to the company.
