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Summary TEMPLATE FOR CORPORATION TAX CALCULATIONS
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TEMPLATE FOR CORPORATION TAX CALCULATIONS A walk through of how to answer the exam question on corporation tax.

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  • February 26, 2024
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  • 2021/2022
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TEMPLATE FOR CORPORATION TAX CALCULATIONS

Company’s income profits (along with capital) charged to corporation tax

Partnership = only charged corp tax where it is corporate partners (PAGE 347 TB)

STEP 1: CALCULATE INCOME PROFITS

Add up Income from various sources: PAGE 358 TB

Land

Investments

Trading Income:
Chargeable receipts
Less
Deductible expenditure
Less
Capital allowances – existing pools at 18% and AIA on first million is taken off
= Trading profit (or loss)

STEP 2: CALCULATE CHARGEABLE GAINS – one off sale

Stage 1: Identify the chargeable disposal
- Likely to include land, shares in other companies.

Stage 2: Calculate the gain or loss – name the gain as pre indexation gain (inflation). Apply indexation factor to
the old figure – look in the facts. (factor x old figure = index allowance) deduct that. It should be smaller – it is a
helping hand from gov to deduct the inflation amount and pay less corp tax. (page 360)
- Proceeds of disposal
- Less
- Cost of disposal = net proceeds of disposal
- That figure LESS
- Other allowable expenditure = gain before indexation or loss
- That figure LESS
- Indexation allowance = times the initial and subsequent expenditure by the indexation factor that covers
the period from date expenditure incurred to date of disposal

Stage 3: Apply any reliefs – PAGE 361 TB

Stage 4: Aggregate remaining gains/losses


STEP 3: CALCULATE TOTAL PROFITS (i.e. add together income profits and gains) then APPLY RELIEFS
AVAILABLE AGAINST TOTAL PROFITS

Main examples: PAGE 365 TB
Carry-across/carry-back relief for a trading loss
Terminal carry-back relief for a trading loss
Qualifying donations to charity


STEP 4 CALCULATE THE TAX AT THE APPROPRIATE RATE

Rate of Tax = 19%

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