Corporation Tax Flashcards
What is corporation tax charged on?
Income and gains of a company - total taxable profits
When is a company liable to corporation tax?
On world wide profits if resident in UK
Incorporated in UK
Incorporated outside UK but central management in UK
What is a chargeable accounting period?
Starts when company begins trading/acquires income, prev period ends
Ends at 12 months from start, ceasing date
What happens when a period exceeds 12 months?
2 accounting periods with separate CT computations
1st 12 months, 2nd remainder
What is involved in a CT computation?
Trading income
Add property income
Add non trading loan relationship(interest)
Add misc income
Add chargeable gains
Less qualifying donations
What are the differences in calculating trading income for companies?
Private expenses are ignored
No appropriation of profits
Interest paid for a trading loan is allowable
Dividends paid by company are not allowable (add back)
What are the differences in calculating capital allowances for companies?
Computed for accounting periods of 12 months
Never includes private use
100% FYA on new plant and machinery in designated enterprise zone - 8 yrs from zone establishment
Full expensing for new asset that isn’t a car, not a gift or leased
Disposal of a fully expensed asset gives a balancing charge of disposal value
What basis is rental income on?
Accruals basis
When is interest payable on a loan not allowable?
For the purpose of buying or improving property
Must be dealt with under loan relationship rules
How are dividends received treated?
Exempt
How are qualifying donations treated?
Donations are made gross
Deducted from total income and gains
What are some examples of trading loan relationships?
Bank overdraft interest
Interest on loans for plant and machinery
Interest on loans for premises for use in trade
What are some examples of non-trading loan relationships?
Interest on loans to purchase and improve property, acquire shares, overdue corp tax, writing off other non-trading loans
Interest on bank accounts, securities, debentures and loan stock, repayments of overpaid corp tax
What are total taxable profits?
Total income and gains less charges
What are augmented profits?
Total taxable profits + ABGH allowable distributions
Allowable distributions - dividends from UK and overseas companies other than those who are >50% subsidiaries of the receiving company
What are the limits for corporation tax?
0 - £50,000 = 19%
£250,000+ = 25%
£50,000 - £250,000 = TTP x 25% less marginal relief: (250,000-AP) x TTP/AP x 3/200
How are the corporation tax limits adjusted and why?
If the accounting periods are less than 12 months x n/12
If there are multiple associates limit/associates x n/12
What classifies a company as large?
1,500,000 < AP < 20,000,000
Tax liability > 10,000
Preceding 12 months AP > 10mil
What classifies a company as very large?
AP > 20mil
When do companies pay their tax?
Non-large: 9 months and 1 day after end of CAP
Large: 4 instalments on 14th of 7th,10th,13th,16th month
Very-large: 4 instalments on 14th of 3rd,6th,9th,12th month
