Corporation Tax: Taxable Total Profits Flashcards
Who pays corporation tax?
UK resident companies
Scope of corporation tax
Worldwide income
And gains
(For the accounting period)
When is a company resident in the UK
Incorporated
Or ‘centrally managed and controlled’
In UK
Total income and gains from a company aka
TTP
TTP
Taxable total profits
Max accounting period for corporation tax purposes
12m
CT: When does accounting period start?
When C starts to trade
(Or receive income CT chargeable)
Or when prev AP ends
CT: When does AP end
12m after beginning of AP
Or if sooner:
End of C’s period of account
When C ceases to trade
What happens for CT if C’s period of account is more than 12m
First 12m is 1 AP
Remainder is a 2nd AP
Trading income: Are dividends paid allowable deductions from profit?
No
CT: Are dividends received exempt?
Yes
But may impact on payment dates of CT
Trading income =
Tax adjusted trading profits
Minus capital allowances
Capital allowance available for assets privately used by a director or employee of the company
Full capital allowances available on all assets
(But taxable benefit in kind may arise on the director/employee)
Are assets qualifying for 100% FYA for sole traders available for company CT
Yes
FYA availability on new (not second hand) plant and machinery
For use in a designated enterprise zone
100%
Allowance for capital expenditure not covered by super deduction, AIA or FYA
18% WDA
WDA
Writing down allowance
AIA amount
200k
CT Super amount deduction for
New and unused plant and machinery
In the main pool
(Other than cars)
130%
CT super deduction availability dates
1 April 2021
To 31 March 2023
Is 100% FYA time apportioned for short accounting periods
No
Is the 130% super deduction time apportioned for short accounting periods
No
How is rental income from UK properties taxed?
Accruals basis
CT:
Is interest payable
On a loan
To acquire or improve property
An allowable expense against property income?
No
CT: Relief for:
Loan
To acquire or improve property
Loan relationship rules
CT: How is interest taxed?
Accruals basis
What do loan relationship rules determine?
Whether interest payable/receivable is classified as
Trading or non-trading
Allowability if interest is classified as trading
Allowable
Or taxable or part of trading income
Allowability if interest is classified as non-trading
Allowable
Or taxable as part of NTLR
Loan relationship rules: Income (interest receivable): Trading
Only if trade is lending money
E.g. banks
Loan relationship rules: Income (interest receivable): Non-trading
Any other interest receivable when trade not lending money (I.e. not trading)
E.g. repayments of CT
Loan relationship rules: Expenses (interest payable): Trading
Overdraft interest
Interest payable
On loans
To purchase
Plant and machinery
Interest payable
On loans/debentures
To fund
Daily operations
Loan relationship rules: Expenses (interest payable): Non-trading
Interest payable on
Loan(s)
To buy
A let property
Interest payable
On loan(s)
To buy
Other companies/investments
Interest payable
On overdue
Corporation tax
Exempt assets for companies
Same (as STS I think)
Except:
Gilt-edged securities
Plus:
Goodwill created
On or after
1 April 2022
How is CT gain calculated on individual chargeable assets for companies
Same as individuals
But companies don’t get AEA
How do companies receive relief for charitable donations
Deducting amount paid when calculating taxable total profits
Made gross
So no grossing-up required
How do companies receive relief for charitable donations: Name
QCD
QCD
Qualifying charitable donations
Basis for reliving QCDs
Cash paid
(Not accruals)
