CT Ch 18

Question 1

Conditions for if a company is a resident in the uk?

Answer 1

1. Incorporated in the uk or
2. Has its centre of management and control in the uk eg board meetings held in uk

Question 2

How are CA for corporations calculated ?

Answer 2

Same way as unincorporated business except:

1. No private use adjustments
2. Calculated for the account period (do max 12m calc)
3. Group companies >50% ownership share the £1m AIA as they please
4. Enhanced CA were available to companies for new P&M (excluding cars) purchased between 1 Apr 21 - 31 Mar 23

Question 3

What are the enhanced CA for companies?

Answer 3

Remember date criteria - 1/4/21-31/3/23

Main pool
Allowance - 130% FYA (super deduction)
Interaction with AIA-claim in preference to AIA
Interaction with WDA-no WDA on these assets as no TWDV remaining after the FYA
Treatment of disposal of asset that claims ECA - an immediate balancing charge arises equal to the disposal proceeds

SRP
Allowance - 50% FYA

Interaction with AIA-use AIA first then claim 50% FYA on amount not covered by AIA
Interaction with WDA-any bal remaining after AIA and FYA is transferred to SRP and qualifies for 6% WDA
Treatment of disposal of asset that claims ECA-an immediate bal charge arises equal to:
1. Disposal proceeds x % of exp on which 50% FYA was claimed x 50%
2. The remaining proceeds are deducted from the SRP bal(prior to wda calc)

Question 4

How are chargeable gains done for companies?

Answer 4

Gains calculated same way as for individuals but:
1. Companies get indexation allowance (IA) for assets acq before Dec 17
2. Companies don’t get AEA
3. Companies pay at CT rate on gains
4. ROR available if criteria is met to gain after deducting IA
5. Separate ROR for intangible assets

Question 5

Indexation allowance formula?

Answer 5

Allowable Cost x indexation factor

Max indexation factor is dec 17

Question 6

How can capital losses for companies (individual companies not groups) be allocated

Answer 6

1. Capital losses must be set against chargeable gains of the same accounting period
2. Excess losses are cf to be set off against future gains
3. Losses cannot be offset against anything apart from capital gains

Question 7

What is SSE? For companies (Apr 17)

Answer 7

Substantial shareholding exemption

1. For disposals on/after 1/4/17, SSE Exemption applies on the disposal of shares if the holder of shares has >=10% of shares for 12 continuous months in the last 6 years,
2. Shares must be for a trading company or the holding company in a trading group
3. If SSE applies disposal is exempt so cannot relieve loss since exempt
4. SSE is automatic and cannot dis-applied

Question 8

What is the rate of CT (think dates)

Answer 8

1. For FY prior to 23/24 (Apr23) CT is 19%
2. For FY 23 onwards if it dependant on their TTP (total taxable profits - all company income excluding dividend income) and AP (total taxable profits + dividend income from companies which are not associated companies)

2.1 based on formula where <50k is at 19%, >250k is at 25% and inbetween is MR

2.2 formula for MR is
TTP X 25% - (250k-AP)X(TTP/AP)x(3/200)

Question 9

What is an associated company?

Answer 9

A company which has a >50% relationship with the company in question or

Both companies are controlled by the same person (company or individual)

Dormant companies not counted but overseas co are

Question 10

How are adjustment of lower and upper limits for CT rate done?(MR)

Answer 10

Adjusted by:
1. Length of the accounting period
2. The numbers of associated companies