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Hello, is it possible that the examiner will create a situation in question 2, that we have several associates and also a small CAP. how will we apportion the Upper and lower limits of CT Liability and Marginal relief then?
and is it possible that we have interest income (possibly net) listed in income statement before Adjusted profits? will we then put them in CT computation? (same for property income). thanks 🙂
If a company has an 8 month CAP and it is associated with 3 other companies then the lower and upper profit limits will be multiplied by 8/12 and divided by 4. Thus the upper profit limit would be:
£1.5M x 8/12 divided by 4 = £250,000
This would then be used in the marginal relief calculation if the company’s Augmented Profit fell between the revised lower and upper profit limits.
If as is usual interest income and property income are included within the company’s profit before tax figure then these are deducted in the adjustment of trading profits and then shown separately within the Corporation Tax computation. Also remember that companies receive interest GROSS not net! The framework of the CT comp must be known and you should not be worrying about fine detail such as the 10% limit regarding job related accommodation when these core topics are still not understood.Thanks 🙂 that clarifies it, actually with Net i meant that any interest income minus interest expense in that period. not that Gross interest minus tax = net interest.
Of course the interest is going to be taxed later if its listed in CT Comp, so it will be double taxed ( assuming i said net interest ) sorry didn’t mean to put it that way and thanks 🙂
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