Corporation Tax Flashcards
(24 cards)
What is the main corporation tax rate for companies with taxable total profits over £250k?
25%
What rate applies to companies with TTP of £50k or less?
19%
What applies to companies with TTP between£50k and £250k?
They may claim marginal relief, which tapers the rate between 19% and 25%
What types of income are taxable for a company?
- Trading income
- Rental income
- Interest income
Are dividends received by companies taxable?
Generally no - most are exempt from corporation tax unless anti-avoidance rules apply
When is expenditure deductible for tax purposes?
When it is:
- wholly or exclusively for the purposes of trade
- Not prohibited by statute (e.g. business entertainment)
- of an income nature (e.g rent, wages, repairs)
Are interest payments on business loans deductible?
Yes, but subject to Corporate Interest Restriction (CIR) - generally limited to 30% of income receipts where net interest exceeds £2m
Why are capital allowances given?
Because capital expenditure and depreciation are not deductible, capital allowances provide tax relief for qualifying capital assets
What is the main capital allowance rate for plant and machinery?
18% per annum on a reducing balance basis
What is the Annual Investment Allowance (AIA)?
A 100% deduction for expenditure on plant and machinery up to £1 million per year
What is full expensing (2023-2026)?
A temporary 100% capital allowance for companies on the cost of new and unused plant and machinery with no cap. Must be claimed in the year of purchase
What is the Substantial Shareholding Exemption?
It exempts gains on disposals of shares if:
- The company held 10% of shares
- For 12 consecutive months in the last 6 years
- the investee company is a trading company/group
Can companies claim Business Asset Disposal Relief or Investor’s relief?
No - available to individuals only
What is rollover relief for companies?
A tax deferral mechanism allowing a gain to be deferred by rolling it into the cost base of a new qualifying asset
Examples of qualifying assets for rollover relief?
- Land and buildings
- Goodwill
- Fixed plant and machinery
- Aircraft, ships, hovercraft
What is the replacement asset time limit for rollover relief?
12 months before or 3 years after the same of the original asset
What are the 4 ways companies can use trading losses?
- Set off against current year profits
- Carry back to previous year
- Carry forward against future profits
- Group relief (surrender to another group company)
What is the Deductions Allowance?
A company (or group) may use up to £5m of profits per year without restriction for carried forward losses
What is the loss restriction rule?
Any excess profits over the £5m Deductions Allowance may only be relieved up to 50% with carried forward losses
How capital losses used for companies?
- First set off against current year capital gains
- then carried forward and set against future capital gains
Can capital losses be carried back?
no - only forward
What is the time limit to crystallise a capital loss with HMRC?
A claim must be made within 4 years from the end of the accounting period in which the loss arose
What is the filing and payment deadline for companies with TTP ≤ £1.5 million?
- Tax payment: Within 9 months and 1 day after the end of the accounting period
- Return filing: Within 12 months
How do companies with TTP > £1.5 million pay corporation tax?
By four instalments during and after the accounting period.
