The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Companies are liable to corporation tax on their TTP. Companies do not pay capital gains tax, but instead the chargeable gains made on disposal of capital assets attract a corporation tax liability.
The definition of ‘profits’ includes the following most common items which are covered in more detail below:
TTP are reduced by qualifying charitable donations (see below).
The adjustment of trading profits for companies is dealt with in the Trading income ― general principles guidance note.
Interest costs incurred on a non-trading loan must be added back to the accounting profit in order to arrive at the trading profit figure. Relief for this interest is given instead as a non-trading loan relationship debit. An example of a non-trading loan is one which is used to buy an investment such as a rental property or shares in another company. This is discussed in more detail in the Taxation of loan relationships guidance note. Similarly, interest income must be removed from trading profits as it will be taxed separately under the loan relationships regime. Whilst the tax rates applied to the differing sources of income are the same, the way in which losses may be set off against the different types of income varies; so this separation is key.
It should be noted that there are many other provisions which impact the deductibility (or otherwise) of interest costs for corporation tax purposes. This may include the transfer pricing regime, the late paid interest rules (although these have been repealed by FA 2015, s 25 with effect from 3
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