Corp Tax

[Ardesco]

Profit for Corporation tax purposes is not necessarily the same as profit computed under accounting standards. So you can't just take "profit" from your accounts and multiply by the Corporation Tax rate to get the exact amount payable. In my case, the differences between the two profit calculations have been so slight that for the first 15 years of contracting I didn't realise there was a distinction, despite having closely monitored what my accountant was doing.

As I said before it was a rough estimation that I gave. To get it done properly get an accountant.

[Sockpuppet]

You need to fill out a CT600 which will tell you the tax that you need to pay.

It really is a) an accountants job or b) a get an accountant to do it one year and copy and paste correct figures next year and pray to god nothing major changes.

[IR35 Avoider]

Am I right in thinking that the amount I'll need to pay corp tax on will be based on the value in my annual accounts ?

Profit for Corporation tax purposes is not necessarily the same as profit computed under accounting standards. So you can't just take "profit" from your accounts and multiply by the Corporation Tax rate to get the exact amount payable. In my case, the differences between the two profit calculations have been so slight that for the first 15 years of contracting I didn't realise there was a distinction, despite having closely monitored what my accountant was doing.

[MrRobin]

No worries. It's designed to be confusing so the government can justify increased budgets for tax investigators.

[Ardesco]

That's CT, not CGT.

And if you are calculating for pre 1st April 2007 then it is 19%, not 20%.

Sorry slip on my part Now where did that pesky G come form......

[MrRobin]

Profit*0.20 = CGT

That's CT, not CGT.

And if you are calculating for pre 1st April 2007 then it is 19%, not 20%.

[ASB]

My annual accs are bog standard contractor.

ie Income = Loads
Expenses = loads
Dividends = loads
Staff Costs = low

No assets apart from my grey matter.

I can work out the amount of CT I need to pay [ but on a month by month basis ] I'm presuming the ann accs will confirm this but want to check.

Fairy snuff. But....

Accounts must include a balance sheet.
The balance sheet must include creditors - short term and long term
Short term creditors includes the CT payable to HMRC

Thus if you have instructed them to prepare accounts they HAVE to do the CT calculation. So all you need do is ask them for the figures - even though they are not specifically detailed in the accounts. you can then check these against your working calculations.

But if you don't have any fixed assets then its operating profit times CT rate and that's about all you need to put on the return - assuming there are no reliefs for losses carried forward or similar (which looks unlikely of course).

[Bluebird]

A very basic idea of how it is worked out is:

Income-Outgoing(excluding divi's)=Profit

Profit*0.20 = CGT

Profit left over can be taken out as divi's

You can estimate your profit monthly and take divi's out of the estimated profit, but you won't know for sure until year end when you get your accounts done.

yep, thats what I've been doing.

I'm hoping the AA will confirm the CT I've estimated that I need to pay.

[Ardesco]

A very basic idea of how it is worked out is:

Income-Outgoing(excluding divi's)=Profit

Profit*0.20 = CGT

Profit left over can be taken out as divi's

You can estimate your profit monthly and take divi's out of the estimated profit, but you won't know for sure until year end when you get your accounts done.

[Bluebird]

Possibly. CT is chargeable on profit (which should be easily available from the annual accounts). However there is the possibility of some releifs. Basically depreciation of fixed assets, this may be a little more difficult to extract from the accounts.

Mind you, I'd argue that they can't actually do your accounts without calculating the CT. If they don't do this how can then possibly produce the balance sheet since it will not include all the creditors?

My annual accs are bog standard contractor.

ie Income = Loads
Expenses = loads
Dividends = loads
Staff Costs = low

No assets apart from my grey matter.

I can work out the amount of CT I need to pay [ but on a month by month basis ] I'm presuming the ann accs will confirm this but want to check.

[ASB]

ok, what i'm looking at is my accountants are producing my annual accounts - I have not asked them to calculate my Corp Tax Return - can I get the figure from my annual return that i can then calculate my CT upon ?

Possibly. CT is chargeable on profit (which should be easily available from the annual accounts). However there is the possibility of some releifs. Basically depreciation of fixed assets, this may be a little more difficult to extract from the accounts.

Mind you, I'd argue that they can't actually do your accounts without calculating the CT. If they don't do this how can then possibly produce the balance sheet since it will not include all the creditors?

[Bluebird]

Depends on what you mean by the amount in your annual accounts. It is based on profit, you can still have money in the company without making a profit.

ok, what i'm looking at is my accountants are producing my annual accounts - I have not asked them to calculate my Corp Tax Return - can I get the figure from my annual return that i can then calculate my CT upon ?

[Ardesco]

Depends on what you mean by the amount in your annual accounts. It is based on profit, you can still have money in the company without making a profit.

[Bluebird]

Am I right in thinking that the amount I'll need to pay corp tax on will be based on the value in my annual accounts ?