How Your Corporation Tax is Calculated

The Tax – Collection and Administration
Following the end of your business's financial year you submit your accounts to HMRC (Her Majesty’s Revenue and Customs) who assess them for calculating your corporation tax liability. This starts but does not end with your published net profit.

Note that when you are entering your figures for a report, Figurewizard performs all of these calculations for you automatically.

The Fiscal Year
The fiscal or tax year on which HMRC bases its calculations runs from the 1st April to 31st March. This is an important point if your own financial year does not end on the 31st March.

Where this is the case the first part of your tax liability will be calculated using the current rates and allowances that apply up to the 31st March and the second part using those that apply from 1st April onwards. The example below demonstrates this:

Example:
1). Your financial year runs from 1st August 2011 to 30th June 2012.
2). This means that the first 243 days of your year are assessed as in fiscal year 2010/2011
3). And the last 122 days are assessed as in fiscal year 2011/2012
4). Therefore 243 days of your profits (i.e. 66.6%) are taxed by the rules of 2010/2011
5). And 122 days (i.e. 33.4%) are taxed by the rules of 2011/2012

VAT
With the sole exception of company cars, where VAT is not recoverable you never include VAT when entering your figures into Figurewizard: Our system calculates all VAT values and transactions for you automatically.

Equally this means that VAT is never taken into consideration by HMRC when calculating the values of your tax liabilities and / or any tax reliefs you may be entitled to.

The Rules
There are four steps HMRC take to work out how much tax you must pay. These are:

1). Establish your Taxable Profit by adding back the depreciation you have deducted in your accounts.
2). Calculate the value of Capital Allowances, which they use in place of depreciation.
3). Multiply the Taxable Profit thus created by the applicable % rate of tax.
4). Deduct what Marginal Relief (if any) should be allowed against the value of that tax.

The Taxable Profit
Your taxable profit is not necessarily the same as the pre-tax profit shown on your accounts. This is because HMRC does not accept your depreciation charges against fixed assets. Depreciation is added back to the published net profit and is replaced by Capital Allowances.

There are exceptions to this, principally goodwill and property which are treated as special cases. Generally your own estimates of depreciation will be accepted where these are concerned if they are considered to be reasonable. It is always advisable to seek the advice of your accountant when dealing with the treatment of goodwill and property.

Capital allowances can very often be more generous than your own depreciation charges, especially in the first year of ownership of assets.

Capital Allowances – Sundry Operating Assets (other than Company Cars)
With exception of company cars - plant; fixtures & fittings; commercial vehicles and computers etc. all fall into the same category for capital allowances. They are referred to here as sundry operating assets. Remember VAT is not part of the value of these assets when allowances are calculated. The allowances break down into AIA (annual investment allowance) FYA (first year allowance) and WDA (written down allowance) on assets Bfwd from previous years as demonstrated in the table below.

Capital Allowances 2010 - Sundry Operating Assets
In the first year of acquisition: maximum of £100,000 - Annual Investment Allowance (AIA)	100%
In the first year of acquisition above £100,000 - First Year Allowance (FYA)	20%
Thereafter on the reducing balance - Written Down Allowance (WDA)	20%

Note that in tax year starting April 1st 2011 the 100% AIA remains but FYA and WDA falls to 18%. From 2012 however AIA falls to £25,000.

Capital allowances are always calculated using the reducing balance method

Example:
1). You acquire operating assets in the year of £70,000 excl. VAT.
2). In year 1 an allowance (AIA) of 100% of this cost up to the maximum allowance of £50,000 is set against profits.
3). An allowance of 20% of the balance of £20,000 (FYA) of £4,000 is also set off against profits.
4). This balance of £20,000 less the allowance of £4,000 (i.e. £16,000) is c/fwd into the next year.
5). And a further 20% allowance (now WDA) of £3,200 is set off against profits in that year.
6). And so on ...............

Capital Allowances – Company Cars
Company cars are treated differently in your accounts and by HMRC in that they are the sole items that are entered including VAT. This is because VAT is not recoverable for cars. Note that this rule does not apply to vans or trucks.

There is no larger allowance for the first year of ownership of Company Cars; the rate is always set at 10% in 2011 and 8% thereafter.

For cars with emissions at or below 110 however 100% relief is allowable.

Marginal Relief
At this point HMRC has taken your pre-tax profit as reported in your accounts, added back the depreciation you have charged and substituted their capital allowances. There is one last step however before your corporation tax charge can be established and that is whether you qualify for what is known as marginal relief or not.

The following explains how to assess if you do qualify and if so, how much marginal relief you are entitled to. The secret here is to understand how the table is to be used. A working example at the end of this paragraph should make this clear.

Corporation Tax and Marginal Relief Rates Fiscal Years 2007 - 2010
Taxable Profit band	Tax Rate 2010	Tax Rate 2011	Tax Rate 2012	Marginal Divider	Marginal Multiplier 2007	Marginal Multiplier 2008	Marginal Multiplier 2009
£0 - £300,000	21%	20%	20%	0	0	0	0
£300,001 - £1,500,000	28%	27%	26%	400	10	7	7
£1,500,000 +	30%	28%	28%	0	0	0	0

What HMRC then does is to check which taxable profit band you fall into once capital allowances have been taken into account. If this is in the band £0 - £50,000 or £1,500,000 + in fiscal year 2010 / 2011 there is no marginal relief available but if you are in band £3000,001 - £1,500,000 that same year you do get relief (i.e. divide by 400 & multiply by 7).

Assuming a taxable profit of £400,000 in a financial year beginning 1st. April 2008, marginal relief at 400/7 would apply.

First the tax before marginal relief is worked out. In the case of £400,000 this is £112,000, (i.e. £400,000 x Tax Rate of 28%).

What happens then is that the taxable profit is deducted from the upper limit of it's taxable profit range.This figure is then divided by 400 and multiplied by 7 and deducted from the tax charge.

Example:
1). Your Taxable Profit after Capital Allowances is £400,000
2). Tax before marginal relief is therefore £112,000 (i.e. £400,000 x 28%)
3). The upper limit of your Taxable Profit range is £1,500,000
4). Deduct the Taxable Profit from the upper limit (i.e. £1,500,000 - £400,000)
5). This leaves £1,100,000
6). Divide the £1,100,000 by 400 = £2,750
7). Multiply this by 7 = £19,250, which is your amount of marginal relief

Your corporation tax payable is therefore £92,750 (i.e. tax of £112,000 less marginal relief of £19,250).

Tax Losses
You only have to pay corporation tax if you have made a profit, but what if you have made losses in previous years?

This is taken into account when calculating your tax liabilities in successive years when you will have made profits. For example if last year, once depreciation had been written back and capital allowances had been substituted you showed a loss, that figure would be deducted from any profit that you made this year.

Example:
1). In your financial year ending 31st March 2009 you made a Taxable loss of £10,000.
2). In your financial year ending 31st March 2010 you made a Taxable Profit of £55,000.
3). The £10,000 loss is deducted from the £55,000 profit
4). And tax for year 2010 is calculated on the balance of £45,000 only.

If you had made a loss of £5,000 in 2010 instead of a profit then that would be added to the previous year's loss of £10,000 and a new total for tax losses of £15,000 would then be carried forward to be deducted from profits you would make in 2011.

Mitigating Your Tax Bill
This is not the end of the story where tax is concerned. Tax law affords a number of concessions beyond the simple matters of capital allowances and marginal relief. These can help to reduce your company’s or indeed your personal tax burden, especially if there is an element of research and development in your business.

The rules can be complex though and may involve changing the way your business is structured, how and when you acquire fixed assets or whether or not to pay yourself dividends instead of salary. This is where both figurewizard and your accountants come in.

No one is better qualified to advise you on these than your accountant but he or she needs tangible figures in front of them to be able to form a correct judgement. By producing a realistic and accurate set of forecasts with figurewizard (which is free for use), you can enable them to do so. If you wish you can produce and save two or more sets to be advised on your likely options on each. This is especially important if your business holds or is likely to hold property, goodwill or inteectual property rights.

One meeting early on covering tax planning can leave you better informed and the better informed you are the less tax your business could end up paying.

Article updated - 15th January 2011.

© Figurewizard.com ltd. This article may not be reproduced without our express permission

Your Comments

Nicely written article, clear examples!
Comment by h

Having read this article I was able to impress my accountant for once!
Comment by skillman

What happens if I sell an asset and make a profit on the deal. Is it treated as a capital gain?
Comment by wendygee

Does the corporation tax you pay form part of expenses deductible from profit for calculation Or is it like depreciation added back to get the taxable profits?
I find no guidance to say whether corporation tax is an expense before getting profits for tax calculation or profit for tax should disregard corporation tax paid.
Comment by Eion MacDonald

Corporation tax (as with all taxes) is not itself tax deductible. If only it were!
Comment by Figurewizard

Is there a limit to how many years' losses you can carry over for the purposes of corporation tax? Our company has made a loss for the previous three trading years due to various acquisitions and stands to make a healthy profit in the next couple of years. Can we carry over these three losses?
Comment by David

There is no time limit for tax losses brought forward and allowable against subsequent profits. However you must either be resident in the UK or, if a non-resident; carrying on your trade through a UK branch or agency.
Comment by Figurewizard

Firstly, thanks for posting this article - really helpful plain and simple advice; much appreciated.

Couple of questions :

1. We received a Inland Revenue Incentive Payment of £150 for online filing of our P35 / P14's 2007/08. Is this tax deductible or should we include it in our taxable profits?

2. How do you write off assets for Capital Allowances purposes? My previous accountant depreciated on a 20% reducing balance, i have written off some old IT (& other tangible) assets that are defunct. I have shown this in my fixed assets calcs for my company accounts, but do not really know what to do in terms of capital allowances.... Therefore my current calc is just 50% on additions, and 25% on the WDV b/f from last years accounts.... But this value obviously includes a proportion of the written off assets. Any help greatly appreciated.

Matt
Comment by Matt

Your incentive payment of one hundred and fifty pounds is not subject to tax. It can be shown in the accounts as sundry or other revenue or you can itemise it if you wish. Your accountant should know to exclude from the taxable profit. As to the question of depreciation and capital allowances - HMRC take no account of depreciation, which is added back to the published net profit before the tax charge is calculated. Capital allowances are then deducted. These are at 100% of the cost (excl VAT) up to a maximum (for the pooled such assets) of �50,000 p.a. for most operating assets such as plant, office equipment, fixtures and fittings, computers, vans and commercial vehicles. Company cars do not qualify for this however. One point to remember is that if you sell any fixed assets which have attracted a capital allowance, HMRC will claim back the proportion of the capital allowance as represented by the proceeds of the sale. If for example you buy a computer for �1.000 this year and sell it for �200 the next, you will have to repay the capital allowance on the �200. A new feature due here on figurewizard.com will enable you to work these allowances out from the end of this year.
Comment by Figurewizard

Thanks for the reply.

You say that we can deduct capital allowances at 100%, but was that true for financial year ending before 1st April 2008 (like mine)? I understood the rules prior to this were 50% in year 1 and then 25% on reducing balance... its it those accounts i am filing so i am not sure the 100% applys...?

Also what do we do with the existing WDV b/f from last year in this years accounts (i.e Year ending 31 Mar 2009)? Can we just claim the full amount of the brought foward WDV to leave a carried forward of zero, or do we have to continue to apply the 25% reducing balance rules as the assests were purchased prior to March 2008?

Thank you in anticipation
Comment by Matt

As a result of Gordon Brown's budget of 2007 the rules governing capital allowances have changed as from 1st April 2008. Prior to then the capital allowance on general operating fixed assets (plant, fixtures, computers and so on) in their first year of ownership was 50% for a 'small' company and 40% for others. Broadly the definition of a small company was one with sales not exceeding �5.6 million in the year in question. Also up until April 2008 subsequent allowances applied on HMRC's written down value (WDV). For example if you had purchased a computer in 2006 for �1,000 and you were a small company, the allowance in that first year would have been �500 (i.e. 50%), leaving a WDV of �500. The following year that balance of �500 would then attract a capital allowance of �125 (i.e. 25%) leaving a WDV of �375 c/fwd and so on. The new allowance for assets older than one year is now 20% though as we point out this means that you cannot claim the full WDV of assets b/fwd in your accounts after April 2008: They will continue to be written down but at 20% and not 25% as before.
Comment by Figurewizard

Nice article, I have ceased trading during the 2007-08 tax year. I carried over a loss of £200 from the first year however I have only made a profit in 07-08 of £100. Is there any possibility I can have the remaining £100 loss offset against my other income as it cannot be carried forward as I am seasing trading?
Comment by Matt

If you are a sole trader then the tax relief on your loss will have already been accounted for as your tax liability is based on revenue less allowable outgoings. If however yours was a limited company the losses will not afford you personal tax relief as they would have been sustained by the company which is regarded in law as a corporate identity, quite separately from its directors or investors.
Comment by Figurewizard

I am told that it is a good idea to acquire some fixed assets prior to the end of our financial year to avoid tax. Would you say that this a good idea?
Comment by ed.parsons

As a result of Gordon Brown's budget of 2007 corporation tax relief of 100% is now wholly based on fixed asset acquisition (not including company cars by the way) up to a maximum of 50,000 pounds in any year. Examples of qualifying assets are commercial vehicles, plant and equipment, fixtures and fittings, office equipment, computers and the like. When the economy is performing reasonably well and the incentive is there to invest in such assets, this is no bad thing for a smaller company. However given the prospects for 2009 and beyond asset acquisition will not be a good idea as it will impact on your probably already stretched cashflow. The dilemma is that as small business now faces the need to cut back here the government ends up taking more of your cash in tax; a classic catch-22 situation. One wonders whether Gordon Brown saw the present economic storm coming in 2007 and changed the rules in the way that he did in order to ensure that he continued to squeeze revenue from the private sector notwithstanding.
Comment by Figurewizard

I understand that when forecasting corporation tax depreciation has to be written back to the profit before calculating capital allowances but are there any other overheads that also have to be written back to the profit?
Comment by M. Gardiner

Entertaining expenses do not qualify for corporation tax relief. Therefore when making a corporation tax forecast the value of these expenses must be added back to the profit together with depreciation charges in order to get to the correct taxable profit.
Comment by Figurewizard

Good article. Could you clarify one thing that I cannot seem to find details of anywhere - must probably looking in the wrong place - I'm helping out on some accounts for a friend - first year of trading in which they are reporting a loss - does this mean thee is no corporation tax due? or do I have to add back things like deprciation etc to show the accounts then to be in profit and pay corporation tax on that? Thanks
Comment by Rockyhad

Corporation tax starts with the taxable profit and the taxable profit will be your friend's net profit as shown on his accounts PLUS depreciation written back. HMRC then applies its own capital allowances, which in the first year at least are generally 100% on most operating fixed assets (up to a maximum of �50,000 on all qualifying assts) with company cars being the outstanding exception. Therefore unless cars represent a large percentage of the assets acquired in the year his tax loss will be all the greater. This tax loss will then be set off against any subsequent taxable profits.
Comment by Figurewizard

I have been told that if my profit and loss account shows a profit of less than £10,000 I do not have to pay corporation tax. I cant see any mention of that in this article so is he wrong?
Comment by alan D

The zero rated corporation tax band for taxable profit of �10,000 or less was scrapped by Gordon Brown from April 2006 while at the same time cutting the tax burden on large companies. This was a disgraceful and indefensible move at the time, punishing many small and start up enterprises - The very sort of businesses that we need more than ever today if the current recession is going to be reversed.
Comment by Figurewizard

What an interesting site. Reading through the comments has suggested that maybe I'm doing something incorrect? I have added back entertainment and depreciation and therefore got my 'taxable profit'. I have then worked out my Capital Allowance (which I've taken as 40%) then deducted this from my taxable profit then I've calculated the CT at 21%. Is this correct or should I not bother with calculating the CA and CT - do the HMRC do this instead?
Comment by Gillian L

HMRC call for 'self assesment' Gilian which means that you have to calculate the corporation tax that you owe. This is usually undertaken on your behalf by your accountant and is required to show in your accounts when they are filed with companies House.
Comment by Figurewizard

How do you treat an equipment bought in the first year but got stolen. I am asking both in terms of capital allowance for corporation tax purpose and Depreciation for company account.
Many thanks for your advice.
Comment by IDbulk

IDBulk - Assume the following;

You purchase the asset; say a laptop for 1,000 pounds excl. VAT in April.
It is stolen four months later in July.
You replace it, again for 1,000 pounds excl. VAT
Your total purchases of fixed assets in the year does not exceed 50,000 pounds.
You depreciate this at the rate of 25% p.a.

This would mean that you would charge depreciation aaginst 1,000 pounds for the year plus you would qualify for 1,000 pounds capital allowance against profits before corporation tax is assessed.

If however you replace it for 800 pounds then you should charge 1,000/12x4 + 800/12x8, which amounts to 867 pounds times 25% depreciation. Depreciation in subsequent years will be @ 800 pounds less depreciation previously charged times 25%.

Capital allowance would effectively represent 100% of 1000/12x4 + 800/12x8 (total again 867 pounds) for that year only.
Comment by Figurewizard

What an excellent site - as a trainee chartered accountant this site is exceptionally useful. Quite excellent.
Comment by Chris J

Chris J

Thanks for your kind words Chris. There are new and important figurewizard calculators to come towrds the end of this year. Also the home page is being redesigned to make navigation easier on what will be a greatly expanded site.
Comment by Figurewizard

What are the rules regarding companies with the same shareholders and this pushing up CT? Do the shareholders and shareholding have to be identical? Thanks in advance for advice.
Comment by Amanda

@ Amanda

This is not an easy one to answer. There are arrangements in place with HMRC for 'group payments' but there are many conditions. Further not all groups can participate.

On the other hand if a number of companies exist with identical members but which are not manifestly not related they could then be judged as individual identities for taxation purposes. As you may gather from this reply however you are best advised to put your exact query before an accountant experienced in these matters. There is no hard and fast rule that applies to all such situations as you describe.
Comment by Figurewizard

HMRC SMALL COMPANY CAPITAL ALLOWANCE RATES DETAILS FIRST YEAR & NEXT YEAR PLANT & MACHINERY,CAR & VAN Y/E 2009 CHANGE OR NO?
Comment by KAUSHIK PATEL

Great site!
I own 2 small limited companies. I am a PAYE employee of one to use up my allowances & get NI credits but unfortunately due to the downturn in the property market this company is not making a profit and won't for some time. The other company has a very small residual income and makes a profit without my time (less than my £6k allowance). Should I also become an employee of the second company so that I can write-off all the profits as wages and avoid paying CT? How much time do I need to spend to justify a salary?
Can I charge my company a fee for doing the accounts & VAT returns as I save paying an accountant?
Many thanks.
Comment by Matt

For s.393 corporation tax loss relief, the time limit for making a claim to carry back a loss is 2 years from the end of the accounting period in which the loss was sustained. For s.393 carry forward is there any time limit ? If I am bring affairs up to date for my small company and filing 5 successive years' Corp Tax Returns (with a trading loss in year 1 and trading profits in the other 4 years), should I be concerned about losing the ability to carry forward the loss in year one ? (i already have to accept that i have late filing penalties and i am aware of that; i don't want to lose the benefit of s393 carry forward as well).
Comment by Graham

Please can you tell me how long does the writing down allowance of say 20% apply for. ie if i buy a laptop computer for £1000 and after 4 years it has depreciated in a straight line to zero value,but i am still using it as it hasnt ben scrapped, can i still be claiming the WDA of 20% against the pool brought forward each year , i mean 20 percent of something will go on forever until it reduces to a penny?
Comment by Paul Smith, Warrington

Really helpful site. Just a comment on one thing that confused me at first. In your first example you use 1 Aug 08 to 30 June 09 - being 11 months not 12! Your split of taxable days suggests a year end of 31 July 2009.
Comment by Angie

Hi
If you sold your debt book as an exceptional 1 off P&L hit for below the balance sheet value would this be allowable for corporation tax purposes?
thanks!
Comment by Jo

what if a company receives money left to it in a will, is this subject to corporation tax if it causes the company accounts to show a profit?
How many years trading losses can be bought forward to offset against corporation tax?
great site, thank you for any advice you can give
Comment by Sharon

Firstly this is by far the best site I have been on regarding corporation tax. Thank you to whoever set this up. Secondly, I have a question. During the first year of trading, our Ltd company made a loss so I didnt claim any Capital Allowances when calculating the Corporation Tax however this year we have made a tiny profit so need to claim the 100% otherwise we will end up paying tax. Is it ok to do this even though it is not consistent with last year?
Comment by Leslie

i,m a sole trader not ltd, my new account this year has given me a figure to give to the family credit, this figure is net profit plus depreciation of fixed assets, this has added £4,000 onto figure that i have to give to fam credit, i have questioned this as two previous accountants over last few years have not done this, and i have been both taxed,and fam credit worked out on net profit,this site seems to be talking about corporation tax alot, are the rules diff for this tax, what figure should i be using for fam credit? help please
Comment by roger

Can any body advise me the point at which corporation tax is calculated from the profic & loss. Would it be net profit? And for the year 2008/9 are we being charged 19%.
If directors & secretary take no salary to help with company cash flow do you have to make a provision for it even though nothing is taken. In my case if no salries are in then company makes profit- it they are put in then the company would make a loss ? Any advise ?
Comment by Mel

HI,

I have recieved a repayment of my last year corporation tax, infact the amount i paid to them they returned it and added on some tax as well.the letter they sent states that i overpaid my corp tax. So i am not too sure why they have done so.
Comment by Bilal Khan

On a general search for advice and support I thought your column here was really informative. The question I was looking for answers too was my son's business paid £31k in Corporation Tax for year end 31st March 2009 - I don't know what his liability for 2010 is going to be yet. However he has just taken two very large bad debt hits with the travel companies going bust and will be making a large trading loss for 2011 (if he survives at all!) Can he claim back any of this £31k and/or mitigate his liability for 2010?
Comment by jeff w

excellent site
Could you advise please small business with 33000 taxable profit but with AIA of 43000 Can the profit be converted to aloss of 10000 or should only 33000 of the AIA be taken and the remainder treated ad written down amount for 20% allowance in future years
Comment by vatman

ABC Capital LLP and ABC Services Ltd are run by same peoples. ABC Ltd is a member of LLP and does not trade. LLP made profits during year ending 31.3.10. Members transfered all profits to Ltd being a member, this means there is nil tax liability for LLP but there is a tax liability on Ltd. According to Ltd's statutory accounts, the profit and loss statement shows only one line: Profit Share. Should we calculate tax liability at 21%? e.g. profit share was £10k then tax liability should be £2100? Is this correct?

On the other hand LLP's statutory accounts has detailed Profit & Loss statement. i.e. Income, expenses (including depreciations, entertainments etc)and the net profit is £10k and this £10k is being awarded to Ltd (being a member). The net profit after profit share for LLP is effectively nil, therefore co tax liability for LLP is zero. Is this correct? Should we add back entertainment in Ltd's PBIT?

Many thanks.

Anthony C.
Comment by Anthony C.

Dear Sir,

ABC LLP and ABC Services Ltd are owned by same peoples and both companies are registered in England & Wales. ABC Services Ltd is a member of ABC LLP alongside the proprietors and any profit generated by ABC LLP is transfered to ABC Ltd as share of profit. If we calculate corporation tax liabilites for Ltd, should we adjust PBIT as per LLP PnL? or simply calculate tax @ 21% (small company tax rate)? (e.g. if the profit share is £100 the tax liability should be £21?) Usually we add any disallowed expenses (i.e. entertainment etc) and add into PBIT. Should we adjust Ltd PBIT prior to tax calculation (i.e. expenses like entertainment listed in LLP's profit & loss statement but not listed in Ltd's PnL statement)? Ltd does not generate any other revenue.

Note: Tax liability for LLP is zero as all profits are transfered to Ltd.

Thank you for advice.

Comment by T. Caro

Very useful article. Could you tell me if it is possible to write off a loss in the current year in order to potentially pay a dividend if I make a profit next year?
Comment by Ben

My company has made a loss of £800.
Do I have to pay corporation tax if I made a loss. If not then how do I present the tax calculations. What figure do I need to put in taxable box ? and tax @21% ?
Thanks

Comment by Jason

Your calculation around AIA's is not quite correct -

"In year 1 an allowance (AIA) of 100% of this cost up to the maximum allowance of £50,000 is set against profits."

should read

"In year 1 an allowance (AIA) of 100% of this cost up to the maximum allowance of £100,000 is set against profits."

Comment by Steve from Raw Solar - www.rawsolar.co.uk

If I am on a VAT fixed rate scheme and have a net income from this, is this included in profit for corp tax purposes?

Comment by Jackie

hello and thank you for this valuable information. I have one rather basic question that i cannot find the answer. We heard that losses are carried into the following tax year, but what about profits? If a limited company had net profit £9000 in tax year ending November 2009 and paid tax on it, is this profit still carried forward into the following tax year ending November 2010? or does the new tax year start from £ zero? many thanks.
Comment by Roberta

Great site - thanks for the clear guidance and explanations. I do have a quick question though - if company has consistently made a profit albeit small in each of the last four years but this year it has made a loss larger than the last two years trading profits - a sign of the times!!! Are you able to take the loss back to these years or am I only able to offset against future profits? How do I go about this?
Comment by CEP

As an IFA we are in the process of purchasing a block of fees from another IFA who is looking to retire.

If I read it right is the following assumption correct.

If we buy a block for say 50000 then we can claim 10000 a year in amortisation costs against our profits and therefore 2000 a year in ct tax at the current rate of 20%
Comment by Chris

My company incurred trading losses last seven years. but year ending 31/03/2011 made a profit. can I add all seven years losses and set off the 2010/11 profit against it. How long can I carry forward trading losses? Is it seven or three.
Your early reply is much appreciated.

Comment by ST

Yes. There is no time limit. You can carry trading losses forward indefinitely.
Comment by Figurewizard

Please use this area to contribute your opinion to this article whether its to add detail, critiscise or correct we really appreciate your input

Bookmark with:

What are these?

Home Cashflow calculator How it works Register My account Articles Contact
Website development by PWDC

Terms and conditions Privacy Policy