BTAX Business Taxation
Session 4:
Corporation Tax
Calculations
Process for calculation of
Corporation Tax
 Step 1: Adjust trading profits to
assessable (taxable) profits
 Step 2: Add together different sources
of income to calculate Taxable Total
Profits
 Step 3: Calculate CT liability
CT calculation
2
Taxable Total Profits
Trading Profits
- Loss relief b/f
+ Income from Property
+ Interest Income
+ Chargeable Gains
= Total Profits
- Loss relief
- Gift aid
= Taxable Total Profits (TTP)
CT calculation
3
Taxable Total Profits
 How are dividends from UK resident
companies treated?
CT calculation
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Tax rate
 Tax rate in FY2016 is 20%
Questions 4.1
CT calculation
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Augmented Profit
 Not relevant to 2016/17
6
Straddling Years
 What happens when financial year end is
not 31 March?
CT calculation
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Trading Losses
3 options: What are they?
CT calculation
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Rental Losses
How are these treated?
Questions 4.3
CT calculation
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Payment of Corporation Tax
 When is this due?
CT calculation
10
Payment of Corporation Tax
CT calculation
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Interest (late payment)
 What interest is charged/paid by
HMRC?
CT calculation
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Penalties
 Errors in returns: as personal tax
 Failure to keep records
 Late return:
Question 4.5
CT calculation
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CT 600
 Will be expected to complete in
examination
 https://www.gov.uk/government/uploads/s
ystem/uploads/attachment_data/file/42068
4/CT600_2015.pdf
CT calculation
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CT 600
 Deadline for adjustments = 4 years from
end of tax year (Co. or HMRC)
 HMRC allowed 6 (20) years where there is
careless behaviour (deliberate
concealment)
CT calculation
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Records
Specifically include:
 Financial statements
 Tax working papers
 Tax return copies
 Purchase invoices
 Details of non-trade income
 Non-current asset schedules
16
Homework
 Tutorial book questions 5.2, 5.5, 5.3, 5.4, 5.1,
5.6
 Make notes from chapter 5
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