Corporation Tax Liability (2) Flashcards
What is an associated companies?
A company associated with another company. usually over 50% of the share capital
If a company has one or more associated companies?
The profit limits are divided by the number of associated companies + 1
Dormant companies?
Do not count as associated companies
What happens with companies which have only been associated for part of an accounting period?
Deemed to have been associated for whole period for the purpose of determining the profit limits
What happens for associate company purposes?
It is irrelevant where a company is resident. Therefore, companies which are resident overseas can be included
What can trading through a company may reduce?
The overall tax and national insurance liability, in particular if profits are extracted in a tax-efficient manner
Small profit threshold corporation tax?
19% less than £50000
Main rate threshold corporation tax?
25% £250000+
What is the margin?
Between £50000 and £250000. Taxed at full rate, then main rate, then relief
What are augmented profits?
Taxable total profits + dividends received. BUt dividends received from 51% group companies are excluded
Marginal relief calculation?
(Upper limit - augmented profits) * 3/200 * (Taxable / Augmented)
When do I pay CT liability?
9 months and 1 day after the end of its accounting period
Corporation tax when augmented profits are in marginal relief and dividends are received?
(Upper rate limit - augmented) * 3/200 * (taxable / augmented)
Time apprtioned in limit calculation, not the tax calculation
When the accounting period is less than 12 months? What happens to limits
£50000 * 9/12
£250000 * 9/12
Multiple associated companies and the limits?
£50000/Number of companies
£250000/Number of companies
