Corporation Tax for Single Companies Flashcards
Which companies are liable to UK Corporation tax?
UK resident companies are liable to UK corporation tax on their UK and worldwide profits.
Non resident companies are only liable to UK corporation tax on their UK income and gains IF they are trading through a UK branch or agency.
What is the proforma for the corporation tax computation?
Adjusted profits Less capital allowances Trading profits Investment income (NTLR) Overseas income Miscellaneous income UK rental income Chargeable gains Total profits Less losses relieved by deduction from total profits Less qualifying charitable donations TTP
Corporation tax at 19%
What is the definition of augmented profits?
Augmented profits are the companies profits plus any dividends not from group companies. This is calculated to determine whether a company is large or small.
What are examples of intangible non current assets?
Intellectual property
Goodwill
Marketing-related intangible assets
Customer-related intangible assets
How do you deal with intangible assets with regards to a corporation tax computation?
Intangible assets follow the same tax treatment as they would in a statement of profit or loss. I.E. If the intangible asset is shown as an expense in the statement of profit or loss then it is a deductible expense. If is treated as income in the statement of profit or loss then it is treated as income.
What is the 4% straight line basis election?
This is where a company has amortisation on a intangible fixed asset and elects to write off the cost at 4%. This is advisable if the patent’s amortisation rate is less than 4%.
How is amortisation of goodwill treated?
Amortisation of goodwill is not deductible for the purpose of corporation tax and should be added back.
How does reinvestment relief work for intangible fixed assets?
If an IFA is sold the proceeds can be reinvested in a new asset if the proceeds are used 1 year before or 3 years after the original asset has been sold.
However the maximum income gain for eligible for rollover relief is the proceeds less cost NOT proceeds less TWDV.
The amount rolled over will then delay the payment of corporation tax until the new asset has been disposed of. Any amount not reinvested in the new asset will be taxed immediately.
What type of expenditure qualifies as R and D?
Staff costs, NIC and pension contributions but excluding benefits. If contractors are used only 65% can be claimed.
Consumables, software, fuel, power and water.
100% FYA can be claimed for capital expenditure on R and D.
The R and D expenditure must be revenue in nature.
What is the R and D relief for an SME?
An SME can receive a 230% deduction for qualifying R and D expenditure.
How do R and D tax credits work?
If an SME makes a loss, it can surrender that loss to HMRC in exchange for the lower of 14.5% of:
Unrelieved trading loss
OR
230% qualifying expenditure
Explain R and D expenditure credits for large companies?
Large companies receive an above the line 13% r and d tax credit.
This is applied by increasing the companies profit by multiplying the companies r and d expenditure by 13% BUT then also reducing the companies tax liability by the 13% of R and D expenditure.
What is the chargeable gain computation for corporations?
Gain Less cost Unidexed gain Less indexation allowance Indexed gain
What are the share matching rules with regards to corporations disposing of shares?
Acquisitions on the same day
Acquisitions 9 days before
FA 85 pool
What should companies do as soon as they become chargeable to corporation tax?
They should file their corporation tax return electronically and include any self assessment form within 12 months after the end of the period of account.
