Commentary

D1.302 What income is taxable?

Corporate tax
Corporate tax | Commentary

D1.302 What income is taxable?

Corporate tax | Commentary

Division D1.3     UK resident companies—Calculation of taxable profits

For updates affecting this Division please see Part D0 Updates

Computation of income

D1.302 What income is taxable?

Profits of a UK resident company (specifically stated as being income and chargeable gains1 (other than gains falling within the ATED regime2; see Division B6.7 and C2.1125–C2.1129A)) are chargeable to corporation tax. Such a charge is labelled in the legislation as being 'the charge to corporation tax on income'3.

The calculation of taxable income is detailed in the rest of this division. Broadly the provisions detailed at Part B2, Part B3, Part B4 apply, where relevant to the computation of trading income for companies. The rest of this division details those rules that are specific only to companies, in particular in relation to the deductibility of:

  1.  

    •     qualifying charitable donations, see D1.316 onwards

  2.  

    •     share scheme costs, see D1.330

  3.  

    •     the cost of shares or share options granted to employees, see D1.335 onwards

  4.  

    •     expenditure in relation to certain gifts/donations, see D1.340–D1.356

Certain income is specifically exempted from corporation tax as detailed at D1.365 onwards

The computation of chargeable gains is described in Division D1.9. The charge to tax for non-UK resident companies is detailed at Division D4.1.

Specific rules which apply only for corporation tax are taken into account, and the amounts so computed for the several sources of income, together with any chargeable gains, are aggregated to arrive at the total profits. For example specific rules for companies apply in relation to:

  1.  

    •     corporate debt (the

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