Financial Management

CHAPTER 10

Corporation
tax
Presenter
 Overview
1. Charge to corporation tax
2. Taxable total profits
3. Computation of corporation tax
4. Payment of corporation tax

Principles of Tax Ethics

 Overview

CORPORATION TAX

SCOPE OF CORPORATION TAX

TYPES OF INCOME
CORPORATION TAX COMPUTATION

Principles of Tax Corporation tax – taxable total profits

Summary

Principles of Tax Corporation tax – taxable total profits

Summary

Principles of Tax Corporation tax – taxable total profits

 Illustration 1 – taxable total profits

You should enter a number in each relevant box. If an amount is not

taxable or no adjustment is required, you must enter a zero or a dash
into the relevant box.
£
Trading income (W1)
Non-trading loans
Dividends
Qualifying charitable donation
Taxable total profits

Principles of Tax Corporation tax – payment and administration

 Illustration 1 – taxable total profits

W1 – Trading income £
Draft accounting profits
Depreciation
Bad debts
Gifts and donations
Professional fees
Staff party
Repairs and renewals
Interest receivable
Exempt dividends received
Interest payable
Capital allowances
Trading income

Principles of Tax Corporation tax – payment and administration

1. Charge to corporation tax

Overview
 Companies are chargeable to corporation tax.

 A UK resident company is chargeable on its worldwide profits.

 A company is charged to tax for an accounting period which cannot exceed 12

months.

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax
1.1. Who is chargeable to corporation tax?
Corporation tax:
 Corporation tax is charged on the income and gains of a company.
 Income refers to the consistent, regular earnings from the primary business activities,
while gains are one-off profits from incidental or non-operational activities.
 Income reflects the core business's ability to generate revenue, whereas gains usually
indicate a profit from external transactions like asset sales or investments.
 The total income and gains of a company is known as taxable total profits (TTP).
 Corporation tax is paid by companies on their taxable total profits for an accounting
period.
A UK company is formed by incorporation under the Companies Acts.
 A company is a legal person.
 A company has a separate legal entity from its owners (shareholders) and its
managers (directors).
Principles of Tax Corporation tax – taxable total profits
1. Charge to corporation tax

1.2. Residence
A company is liable to corporation tax on its worldwide profits if it is resident in the UK.

A company is resident in the UK either:

 It is incorporated in the UK; or

 It is incorporated outside the UK, but its central management and control are
exercised in the UK.
 This refers to where the key management decisions are made at the highest
level, usually by the board of directors.
 If the company’s board of directors meets in the UK to make strategic decisions,
the company may be considered a UK tax resident, regardless of its place of
incorporation.

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax

1.2. Residence
Double Taxation Treaties

In situations where a company could be considered a tax resident in both the UK and
another country (due to the “central management and control” test or similar criteria in
another country), the UK’s double taxation agreements (DTAs) with the other country
come into play.

Implications of Being a UK Tax Resident

 UK tax-resident companies are liable to pay UK Corporation Tax on their worldwide

profits (including profits from UK and non-UK sources).

 Non-UK tax-resident companies are usually taxed only on UK-source income and
profits from activities conducted in the UK.

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax

1.3. Accounting periods

 A company is charged to corporation tax in respect of an accounting period.

 Accounting period is the period for which a company’s taxable total profits are
charged to corporation tax.

 The accounting period will usually be the same as the company’s period of account.

 Period of accounting: the period for which a company has prepared its accounts.

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax

1.3. Accounting periods

An accounting period starts:

 When the company begins to trade or acquires a source of chargeable income.

 When the previous accounting period ends and the company is still within the charge
to corporation tax.

An accounting period ends on to earliest of:

 The end of 12 months from the start of the accounting period

 The date the company begins or ceases to trade

 The date the period of account ends.

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax
1.3. Accounting periods
If company has a period of account exceeding 12 months, there will be two accounting
periods, each giving rise to a separate corporation tax computation.
 The first accounting period of such a long period of account will be the first 12 months of
the period.
 The second accounting period will be the remainder of the period of account.
The company will need to file two Corporation Tax returns for each accounting period.
The company’s income, expenses, and tax allowances must be apportioned between the two
accounting periods based on time.
Example:
 For a 15-month period of accounts, 80% of income and expenses may be attributed to
the first 12-month period, and 20% to the remaining 3 months.
 Some items (such as specific gains or losses) may need to be allocated specifically to the
period when they occurred.

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax

1.3. Accounting periods

Example: Long period of account

Principles of Tax Corporation tax – taxable total profits

1. Charge to corporation tax

1.3. Accounting periods

Example: Long period of account

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

Overview
 Trading profits after capital allowances are dealt with as trading income.

 Income from renting out property is dealt with as property income.

 Loan relationships include interest income and interest expense.

 Loan relationship may include trading credits and debits and non-trading credits and
debits.

 Gains made by companies are chargeable to corporation tax.

 Qualifying donations are deducted to arrive at taxable total profits.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.1. Overview of corporate tax computation
Per accounting period
£
Trading income X
Property income X
Non-trading loan relationship (non-trading interest) X
Miscellaneous income X
Income not otherwise charged X
Chargeable gains X
Qualifying donations (X)
Taxable total profits X
Principles of Tax Corporation tax – taxable total profits
2. Taxable total profits

2.2. Trading income

 The calculation of trading income for a company is similar to that for a sole trader or
partnership.

 The company will produce accounts for a period of account and these must be
adjusted for tax purposes.

 Capital allowances are then deducted to produce a figure of trading income.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.2. Trading income

2.2.1. Adjustment to trading profits for companies
In general the adjustment to profits calculation will follow the same rules for a sole
trader or partnership but there are some differences.
 As company is a legal entity separate from its shareholders and directors, there is no
adjustment to profit needed for private expenses met by the company.
 For the same reason, there will be no adjustment for appropriation of profits. (e.g.
salary paid to a director).
 Interest paid by a company in respect of a trading loan relationship will be an
allowable expense in the calculation of its trading income.
 Dividends paid by a company are not allowable as a trading expense in the
calculation of its trading income.
 If the company has a long period of account, the tax-adjusted profits should be time
apportioned into relevant accounting periods at this stage.
Principles of Tax Corporation tax – taxable total profits
2. Taxable total profits

2.2. Trading income

2.2.2. Capital allowances for companies
The general principles of capital allowances seen in Chapter 6 for sole trade and
partnerships also apply to company.
 Definition of plant and machinery.
 Writing down allowances – WDAs
 First year allowances – FYAs
 Annual investment allowance - AIAs
However there are some differences as presented below.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.2. Trading income
2.2.2. Capital allowances for companies
Differences when computing capital allowances for a company:
 Capital allowances for companies are calculated for accounting periods, not periods of account.
 This means that capital allowances for companies can never be computed for a period
longer than 12 months.
 In a longer period of accounts, two separate capital allowance computations are required.
 Capital allowance computations for companies never include private use adjustments.
 A 100% FYA is available for expenditure incurred by a company on new (not second-hand) plant
and machinery for use in as a designated enterprise zone.
 The expenditure must be incurred in the eight years from the date the enterprise zone is
established.
 From 1 Apr 2023 until 31 Mar 2026, companies can claim a temporary first year allowance at
100% (know at full-expensing) for main rate expenditure.
 The plant and machinery must be new and unused, must not be a car, given to the company
as a gift, or bought to lease to someone else.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.2. Trading income
2.2.2. Capital allowances for companies
Full-expensing FYA assets
 Special rules apply on disposal of assets which have been benefited from the full-
expensing FYA.
 An immediate balancing charge will be made, equal to 100% of the disposal value for
main rate assets.
Exam note
 Whist on practice a company would want to avoid a balancing charge on disposal and
would therefore claim the annual investment allowance in priority to full-expensing, for
exam purposes this is beyond the scope of your syllabus.
 In exam questions you will need to calculate the maximum capital allowances a company
could claim for an accounting period and will not be expected to itemize whether it is the
AIA or the full-expensing FYA that has been claimed.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.2. Trading income

Example: Capital allowances and long period of account

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.2. Trading income
Example: Capital allowances and long period of account

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.2. Trading income
Example: Capital allowances and long period of account

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.2. Trading income
Example: Capital allowances full expensing

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.2. Trading income
Example: Capital allowances full expensing

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.3. Property income

A company’s rental income from property situated in the UK is taxed as property
income.

 Rent received is dealt with on an accrual basis.

 This means that only rent relating to the accounting period is taken into account.

 The date of receipt is not relevant.

Interest payable on a loan taken out by a company of the purpose of buying or

improving let property is not an allowable expense for property income.

 Instead it is dealt with under the loan relationship rules.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.3. Property income

Example: Property income

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.3. Property income

Example: Property income

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.4. Dividends received

 A company rarely pays tax on dividends received from other companies.

 Dividends received are therefore ignored in computing taxable profits.

 For the purpose of exam, assume all dividends received by a company are exempt.

 Dividends received from other companies are taken into account in determining
when a company has to pay its corporation tax liability, and the rate of tax that the
company pays.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.5. Loan relationships - interest

 Interest payable and receivable, such as investment interest, is allowable and taxable
respectively as a loss or profit on non-trading loan relationships.

 This income is received gross.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.6. Chargeable gains

Chargeable gains are included in the computation of taxable total profits.
 Chargeable gains are initially computed in the same way as for individuals, however,
for companies, no annual exempt amount is available.
 Exempt assets from companies are as for individuals, with the addition of goodwill
created or acquired on or after 1 Apr 2002 and the exclusion of gilt-edged securities.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.6. Chargeable gains

Overview of computation of a chargeable gain for a company
£
Disposal consideration X
Less incidental costs of disposal (X)
Net disposal consideration X
Less allowable costs (X)
Chargeable gain X

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.6. Chargeable gains

Example: Chargeable gain for a company

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.6. Chargeable gains

Example: Chargeable gain for a company

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.6. Chargeable gains
Example: Chargeable gain for a company

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.6. Chargeable gains
Example: Chargeable gain for a company

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits
2.6. Chargeable gains
Example: Chargeable gain for a company

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.7. Miscellaneous income – Income not otherwise charged

 Miscellaneous income received by a company is taxable as income not otherwise
charged.

 Such income is received gross.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.8. Qualifying charitable donations

Qualifying charitable donation (QCD): the amount paid by a company to a charity in the
account period.

 A company may make a charitable donation.

 The conditions for a donation to qualify for tax relief are the same as for individuals.

 The method of tax relief for a company differs from that used for individuals.
 A company makes qualifying donations gross.
 The amount paid in the accounting paid is deducted from the company’s total
income and gains.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.9. Taxable total profits

Taxable total profits (TTP): the sum of a company’s income and gains less its qualifying
donations paid for an accounting period.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.9. Taxable total profits

Example: Taxable total profits

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.9. Taxable total profits

Example: Taxable total profits

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

Loan relationship
 a company has a loan relationship if it loans money as a creditor or is loaned money
as a debtor.
Loan relationship includes:
 Bank and building society accounts
 Bank overdrafts
 Government gilt-edged securities
 Loan to other companies (which are often in the form of the debentures)
Loan relationship does not include:
 Trade debts

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

 All profits and losses on loans (whether the company is a lender or borrower) are
taxed under the loan relationship rules.
 Interest payments are taxed or relieved on an accrual basis.
 If the company has been lent money for trade purposes there is a trade loan
relationship.
 If the company has been lent money for a non-trade purpose, there is a non-trading
loan relationship.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

Trading loan relationship

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

Non-trading loan relationship (NTLR)

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

The credits (income) and debits (expenses) on loan relationships are combined.
 If there is a net profit, this amount is taxable as non-trading loan relationship.
 Is there is a net deficit, there will be no amount taxable under loan relationships.
The deficit is relieved in a number of ways, but there are beyond the syllabus of this
exam.

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

Example: Non-trading loan relationships

Principles of Tax Corporation tax – taxable total profits

2. Taxable total profits

2.10. Loan relationships

Example: Non-trading loan relationships

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

Overview
 Corporation tax is charged on the taxable profits of a company.

 The rate of corporation tax depends on the augmented profits of the company,
compared with upper and lower limits.
 The main rate applies if the company has augmented profits above the upper
limit.
 The small profits applies if the company has augmented profits below the lower
limit.
 Marginal relief applies for companies between the limits.

 The limits for the rates are scaled down in short accounting periods.

 The limits are divided between associated companies.

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.1. Augmented profits

After the computation of taxable total profits, a company need to work out the
augmented profit.

Augmented profit will determine:

 What rate of corporation tax applies.

 The payment date(s) for corporation tax.

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.1. Augmented profits

Augmented profits: taxable total profits plus exempt ABGH distributions.

Exempt ABGH distributions:

 Exempt dividends received from UK and overseas companies.

 Exempt ABGH distributions are added to taxable total profits to give augmented
profits.

Exceptions:

Exempt ABGH distributions received from companies which are:

 51% subsidiaries of the receiving company

 51% subsidiaries of a company of which the receiving company is as 51% subsidiary

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.1. Augmented profits

Example: Augmented profit

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.1. Augmented profits

Example: Augmented profit

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.1. Augmented profits

 Exempt ABGH distributions allow UK companies to receive dividends from certain
companies (either domestic or international) without paying corporation tax on those
amounts.

 These exemptions are designed to avoid double taxation on corporate profits, where
the distributing company has already paid tax on its profits.

 The specific exemption that applies (A, B, G, or H) depends on factors like the size of
the company making the distribution, the control the recipient company has over the
payer, and the nature of the shares held.

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.1. Augmented profits
Types of Exempt ABGH Distributions
1. Exempt A Distributions
 Small company exemption
 Distributions received by a UK company from a company that qualifies as a "small company" under the EU's definition
of small and medium-sized enterprises (SMEs) can be exempt from tax.
2. Exempt B Distributions
 Control exemption
 A UK company receiving a distribution from another company it controls (i.e., where the recipient company owns at
least 50% of the voting shares or holds a majority interest) may receive this income tax-free.
3. Exempt G Distributions
 Non-redeemable ordinary shares
 Distributions from non-redeemable ordinary shares may be exempt from tax. These are shares that cannot be
redeemed by the issuing company (i.e., they do not have a fixed repayment date).
4. Exempt H Distributions
 Equity holding exemption
 If a company holds a substantial equity investment in another company and receives dividends or profit distributions,
these can also be tax-exempt under certain conditions.
 The equity stake typically needs to be significant, such as holding more than 10% of the ordinary share capital.
Principles of Tax Corporation tax – taxable total profits
3. Computation of corporation tax

3.2. Main rate of corporation tax

 A company’s corporation tax liability is computed by applying the corporation tax
rate to the company’s taxable total profits.

 Rates of corporation tax are fixed for Financial Years ( FYs).

 FY 2023 runs from 1 Apr 2023 to 31 Mar 2024.

 In FY 2023, the main rate of corporation tax applies if a company has augmented
profits exceeding £250,000.

 The main rate of tax applied to taxable total profits is 25%.

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.2. Main rate of corporation tax

Example: Main rate of corporation tax

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.2. Main rate of corporation tax

Example: Main rate of corporation tax

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.3. Small profits rate of corporation tax

 The small profits rate of tax applies if the company has augmented profits of
£50,000 or less.

 The small profits rate of tax is 19%.

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.4. Marginal relief

 Marginal relief applies if a company has augment profits of over £50,000 but not
exceeding £250,000.

 First, compute corporation tax at the main rate on taxable total profits and then
deduct:

(U – A) * N/A * 3/200

Where:

• U = upper limit (£250,000)

• A = Augmented profits

• N = Taxable profits

• 3/200: the standard fraction for FY 2023

Principles of Tax Corporation tax – taxable total profits
3. Computation of corporation tax
3.4. Marginal relief
Example: Marginal relief

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.4. Marginal relief

Example: Marginal relief

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.5. Short accounting periods

 The limits for augmented profits relate to a 12-month accounting period.

 If the accounting period is less than 12 months, the limits must be scaled down.

Example: Short accounting period

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.5. Short accounting periods

Example: Short accounting period

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax

3.5. Short accounting periods

Example: Short accounting period

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
Company A and B are associated companies if:

 One company is under the control of the other; or

 Both are under common control of a third party (individual, partnership or another
company).

Control means over 50% of the issued share capital or voting power or distributable
profits or assets if the company ceases to exit.

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
 The small profits rate limits apply to a company and its associates.

 Associated companies include non-UK resident companies.

 Sub-subsidiaries, i.e. where one company controls another, which in turn controls
another, are also included as associated companies.

 Companies which are associated for only part of the accounting period are deemed
to have been associated for the whole accounting period for the purposes of
determining the limits for marginal relief.

 Dormant companies (companies which are not carrying on a trade or business) are
ignored.

 Where a company is associated with one or more companies, the upper and lower
limits are divided equally between the associated companies in order to determine
the corporation tax rate.
Principles of Tax Corporation tax – taxable total profits
3. Computation of corporation tax
3.6. Associated companies
Example: Associated companies

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
Example: Associated companies

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
Example: Sub-subsidiary

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
Example: Sub-subsidiary

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
Example: Effect of associated companies

Principles of Tax Corporation tax – taxable total profits

3. Computation of corporation tax
3.6. Associated companies
Example: Effect of associated companies

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

Overview
 The date(s) for payment of corporation tax depends on the company’s level of
augmented profits.

 The limits are scaled down for short accounting periods or where there are one or
more associated company.

 A company with augmented profits exceeding the limit pay corporation tax in
instalments, and the due date of these instalments varies depending on whether the
company is classed as ‘large’ or very ‘large’.

 Other companies have a single payment date of nine months and one day after the
accounting period.

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.1. Due date

 The due date for corporation tax payable by most companies is 9 months and one
day after the end of the accounting period.

 This is the case unless the company is a large or a very large company in the
accounting period.

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.1. Due date

Example: Payment of corporation tax

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.1. Due date

Example: Payment of corporation tax

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.2. Payment – Large companies

A large company is one with augmented profit greater than the £1.5 million limit but not
exceeding the £20 million limit.

Both of these limits are adjusted downwards for short accounting periods and for the
number of associated companies.

A company is NOT treated as large if:

 It has a tax liability of less than £10,000 (based on a 12-month accounting period); or

 It was not a large company in the preceding 12 months and it has augmented profits
of £10 million or less in this accounting period.
 If the company has associated companies, the £10 million limit is divided
between the company and its associated and is also adjusted if the accounting
period is short.

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.2. Payment – Large companies

 The limits (i.e. £1.5 million and £10 million limits) are based on a single company with
12-month accounting period.

 Where accounting period is short and/or there are associated companies, then these
limits should be pro rated.

 Unlike for the marginal relief limits (i.e. when calculating the amount of corporation
tax due), the number of associated companies for the purposes of determining the
payment dates is based on the number of associated companies on the last day of
the accounting period.

 A large company must pay corporation tax in four equal instalments based on the
company’s estimated liability for the accounting period.

 The instalments are due on the 14th day of the 7th, 10th, 13th and 16th months after the
start of a 12-month accounting period.
Principles of Tax Corporation tax – taxable total profits
4. Payment of corporation tax

4.2. Payment – Large companies

 In the examination, you will not have to determine the payment dates for a large
company with a shorter accounting period, but you may be required to determine the
augmented profits limit for a large company with a short accounting period.

 In practice, the company will make revised estimates of how much each instalment
should be as the accounting period progresses.

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.2. Payment – Large companies

Example: Payment by instalments

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.2. Payment – Large companies

Example: Payment by instalments

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.3. Payment – Very large companies

 Companies which have augmented profits exceeding £20 million must also pay their
corporation tax liabilities in quarterly instalments.

 Vary large companies must pay their liabilities four months earlier than large
companies.

 Instalments are due on the 14th day of 3rd, 6th, 9th and 12th months of the accounting
period.

 The £20 million limit for very large company is adjusted downward for short
accounting periods and the number of associated companies at the end of the
previous accounting period.

 In the examination, you will not have to determine the payment dates for a very large
company with a shorter accounting period, but you may be required to determine the
augmented profits limit for a very large company with a short period.
Principles of Tax Corporation tax – taxable total profits
4. Payment of corporation tax

4.3. Payment – Very large companies

Example: Payment by instalments

Principles of Tax Corporation tax – taxable total profits

4. Payment of corporation tax

4.3. Payment – Very large companies

Example: Payment by instalments

Principles of Tax Corporation tax – taxable total profits