Business Tax (UK Corporation Tax) Flashcards

The UK corporation tax rate for companies with augmented profits over £250,000 for the financial year 2023 is:

Answer: 25%

From 1 April 2023, the main rate of UK corporation tax is 25% for companies with augmented profits exceeding the upper limit of £250,000. The small profits rate is 19% below £50,000, with marginal relief in between.

Augmented profits for corporation tax purposes are calculated as:

Answer: Profits chargeable to corporation tax plus exempt dividends received from non-associated companies

Augmented profits = profits chargeable to CT + dividends received from non-associated companies. They are used to determine whether a company falls within the small profits rate, marginal relief, or main rate.

For UK corporation tax, the small profits rate applies to companies with augmented profits below:

Answer: £50,000

The small profits rate of 19% applies to companies with augmented profits at or below £50,000. Between £50,001 and £250,000, marginal relief reduces the effective CT rate from 25% toward 19%.

Marginal relief for corporation tax is available to companies with augmented profits:

Answer: Between £50,001 and £250,000

Marginal relief applies to companies with augmented profits between £50,001 and £250,000, providing a graduated reduction in effective CT rate between the small profits rate (19%) and the main rate (25%).

For corporation tax purposes, dividends received from UK companies are generally:

Answer: Exempt from corporation tax

Dividends received from UK companies are generally exempt from corporation tax under the dividend exemption rules, preventing economic double taxation of company profits distributed to shareholders.

The accounting period for UK corporation tax purposes cannot exceed:

Answer: 12 months

A corporation tax accounting period cannot exceed 12 months. If a company's accounts span more than 12 months (e.g., on incorporation), the period is split into two CT accounting periods.