School boy question on CT

[northernladuk]

Easy to mock, but a shockingly common belief. I had somebody tell me that Starbucks asking for charity donations was a scam because it let them pay less corporation tax...

Man that's just ridiculous.. I mean, anyone thinking that Starbucks pay any CT at all. Unbelievable.

[jamesbrown]

Agree with vwdan, it's a surprisingly common misconception among n00bs that it reduces actual CT by £1 for every £1 spent (rather than profits that suffer CT).

[ApeShape]

You know how Einstein was like um, really bad at football? That's me.

[northernladuk]

You know how Einstein was like um, really bad at football? That's me.

Einstein wasn't a footballer though...

[lecyclist]

You know how Einstein was like um, really bad at football? That's me.

Some stuff is just not interesting (I have the same problem thinking about pensions). Like eating a plate of kale.

But sometimes an important subject (like exchanging the never to be replaced days of your life for money, and understanding basic accounting terminology) requires you to focus and overcome that mental inertia.

[SimonMac]

MODS, can we stickie this thread so we can point people to it when ever they ask "do you really need an accountant?"

[Craig@Clarity]

Another bit of general advice for the OP which is a common misconception (just in case you are unaware); dividends are not included as expenses i.e. if you declare a dividend, it doesn't reduce your CT. Dividends are paid out of profit AFTER corporation tax.

Turnover/Sales : A
Less Expenses : B
Profit/(Loss) : C = A - B
CT @ 19% on profit : D = C x 19%
Profit after corporation tax : E = C - D

[Lance]

Another bit of general advice for the OP which is a common misconception (just in case you are unaware); dividends are not included as expenses i.e. if you declare a dividend, it doesn't reduce your CT. Dividends are paid out of profit AFTER corporation tax.

Turnover/Sales : A
Less Expenses : B
Profit/(Loss) : C = A - B
CT @ 19% on profit : D = C x 19%
Profit after corporation tax : E = C - D

hence why I pay a lump sum into my pension as I approach year end and stare in horror at the CT bill.

[northernladuk]

hence why I pay a lump sum into my pension as I approach year end and stare in horror at the CT bill.

Jeez, don't give the OP that option. He'll bust a blood vessel trying to work that one out.