Business Tax Computations Flashcards
6 cards from real AAT L4 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Business Tax Computations flashcards as text
A company sells a factory it has used for 12 years for £600,000. The original cost was £350,000 and indexation allowance (up to December 2017) is £95,000. What is the chargeable gain?
Answer: £155,000
Gain before indexation = £600,000 − £350,000 = £250,000. Indexation allowance = £95,000. Chargeable gain = £250,000 − £95,000 = £155,000.
For the financial year 2023 (FY2023), the main rate of corporation tax applies to companies with profits above what threshold?
Answer: £250,000
From 1 April 2023, the main rate of 25% applies to profits above £250,000. The small profits rate of 19% applies up to £50,000, with marginal relief between £50,000 and £250,000.
A company makes a loan to its director of £30,000. The company does not charge interest. Which of the following tax charges applies?
Answer: A section 455 CTA 2010 charge of 33.75% of the loan amount applies
A s455 CTA 2010 charge of 33.75% (£10,125) is payable by the company when a loan is made to a participator (shareholder/director). It is repayable when the loan is repaid.
Company A has trading profits of £300,000 and Company B (a 75% subsidiary) has a trading loss of £80,000. They wish to use group relief. What is Company A's taxable profit after group relief?
Answer: £220,000
Group relief allows a 75% subsidiary's trading losses to be surrendered to the parent. Company A can claim £80,000 of Company B's loss, reducing its taxable profit to £300,000 − £80,000 = £220,000.
What is the purpose of the 'disincorporation relief' or, more broadly, the 'substantial shareholding exemption' (SSE) in corporation tax?
Answer: To exempt gains on disposal of shares in trading subsidiaries where certain conditions are met
The Substantial Shareholding Exemption (SSE) provides a complete exemption from corporation tax on gains arising from the disposal of shares in trading subsidiaries where the conditions (12 months' 10%+ holding in a trading company) are met.
A company purchased a car (CO2 emissions: 45g/km) for £30,000. What capital allowance pool does this car go into and what is the annual WDA rate?
Answer: Main pool, 18% WDA
Cars with CO2 emissions of 50g/km or less (but above 0g/km) go into the main pool and qualify for an 18% writing down allowance. Zero-emission cars get a 100% first-year allowance.