Additional Aspects of Corporation Tax Flashcards
(9 cards)
how is interest taxed for companies?
accruals basis
when it’s earned/incurred
interest receivable for trading/non trading?
trading = if trade is lending money e.g., a bank
non-trading = most companies’ interest income is non-trading
interest payable for trading?
- overdraft interest
- interest paid on loans to buy plant & machinery
- interest on loans to fund operations
- interest on loan to buy assets of another company
- interest on loan to buy building to be used in trade e.g., factory
interest payable for non trading?
- interest on loan to buy property for non-trade purposes
- interest on loan to buy another company/other investments
- interest on underpaid corporation tax
how is NTLR income calculated?
non-trade interest receivable xxx
less: non trade interest payable (xxx)
equals: NTLR income/deficit xxx
how are incidental costs of loan finance treated?
non-trade: incidental costs are treated as NTLR debit
trade: incidental costs are treated as trading income debit
how is interest paid to buy/improve property handled?
dealt with under the loan relationship rule
not an allowable expense against property income
how is the profit/loss on disposal of a debt instrument handled?
taxable under NTLR under loan relationship rules
rather than as a chargeable gain/loss
