This is a Working Example of our Forecasts
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# Forecast Corporation Tax

## HMRC rules and how they work: An example of how Figurewizard calculates and applies your capital allowances, taxable profit, and corporation tax forecast.

 forecast for year beginning the 1st. May 2023 May 2024 May 2025 Corporation Tax Year - Period 1 2023 2024 2025 Corporation Tax Year - Period 2 2024 2025 2026 Corporation Tax Period 1 - Days 336 335 335 Corporation Tax Period 2 - Days 30 30 30 Net Profit before Tax 94,381 99,038 252,174 add: Depreciation 10,876 17,543 20,290 Adjusted Pre-Tax Profit Cfwd 105,257 116,581 272,464 less: Tax Losses Bfwd 0 0 0 less: Capital Allowances Period 1 30,857 17,658 22,729 less: Capital Allowances Period 2 2,755 1,581 2,035 add: Balancing Charge 0 0 0 Taxable Profit Cfwd Period 1 65,773 76,168 219,274 Taxable Profit Cfwd Period 2 5,873 6,801 19,578 Taxable Profit for the Year 71,645 82,969 238,852 Corporation Tax Rate - Period 1 25% 25% 25% Corporation Tax Rate - Period 2 25% 25% 25% Corporation Tax Charge - Period 1 16,443 19,042 54,818 Corporation Tax Charge - Period 2 1,468 1,700 4,894 Tax before Marginal Relief 17,911 20,742 59,713 Marginal Relief Period 1 2,456 2,300 154 Marginal Relief Period 2 219 205 14 Corporation Tax Payable 15,236 18,237 59,546 Tax Loss Cfwd 0 0 0

### Calculating Taxable Profit

Taxable profit differs from net profit as in the profit and loss forecast. Figurewizard makes all of the changes needed to create taxable profit.

### Depreciation and Capital Allowances

Because cash transfers do  not take place for provisions such as for bad debts they are added back to net profit. Depreciation is a provision, so it too is added back to be replaced by capital allowances.

In their year of acquisition, fixed or non-current assets up to a value of £1 Million ex-VAT are entitled to an annual investment allowance (AIA) of 100%.

These will typically be office equipment, computers, fixtures and fittings, plant and machinery and commercial vehicles.

Property, company cars and computer software do not qualify for AIA: these are subject to lower written down allowances (WDA) over their lifetime.

### Corporation Tax Rates Small Company

Taxable profits up to a maximum of £50,000 continue to be taxed at 19%.Taxable profits above £50,000 are taxed at 25%.

Profits from £50,000 to £250,000 however qualify for Marginal Relief.

### How to Calculate Marginal Relief Simply

Marginal relief is calculated by a formula 3/200. For example with a taxable profit of £120.000 marginal relief is calculated as follows.

 Marginal Relief Limit £250,000 Taxable Profit £120,000 Corporation Tax @ 25% £30,000 Marginal Limit less Taxable Profit £130,000 Divide That by 200 £650 Times 3 equals Marginal Relief £1,950 Corporation Tax less Marginal Relief £28,050

### Paying Corporation Tax

For Companies with taxable profits up to £1,500,000, their tax is payable nine months from the end of your financial year plus one day’s grace.

Figurewizard, having calculated both the taxable profit and corporation tax due for you executes payment in the ninth month following your financial year-end.

Companies with profits greater than £1.5 million up to £20 million pay in 4 instalments: in 7, 10, 13 and 16 months from the start of the financial year, not the end.

Companies with profits greater than £20 million will pay in 4 instalments in 3, 6, 9 and 12 months,again, also from the start of the financial year.
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