Corporation Tax

Question 1

When is corporation tax due

Answer 1

Within 9 months and 1 day of end of accounting period even if final assessment hasn’t yet been agreed with HMRC as this can take 12 months

Question 2

Can CT be paid in instalments

Answer 2

If annual profits are over 1.5 million it can be paid in 4 instalments

Question 3

Step 1 CT

Answer 3

Calculate income profits including trading income and other income

Question 4

Step 2 CT

Answer 4

Calculate gains / losses

Take indexation allowance when deducting expenditure

Question 5

How to calculate indexation allowance

Answer 5

Multiply initial and subsequent expenditure by the indexation factor that covert be period for the date the expenditure was incurred to the date of disposal

Question 6

Exemption for disposals of substantial shareholding’s

Answer 6

A company’s gains on disposal of shares in another company are completely exempt from CT

Must have owned at least 10% ordinary shares for at least 12 months beginning not more than 6 years before the disposal

The company in which the shares are owned must have been a trading company throughout 12 month period

Disposal after 1 April 2017

Question 7

Step 3 CT

Answer 7

Calculate total profits (add step 1 and step 2)

Apply reliefs

CGT reliefs are applied at step 2. Here IT reliefs are applied

Question 8

Step 4 CT

Answer 8

Calculate the tax at 19%

If accounting year is different to corporation tax financial year and rates of tax changed then apply different rates to appropriate parts of accounting period

Question 9

What is the corporation tax year

Answer 9

1 April - 31 March

Question 10

What is the financial year

Answer 10

1 April - 31 March

Question 11

What is income tax year

Answer 11

5 - 6 April

Question 12

How are financial years described

Answer 12

By the period in which they commence