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Hi guys,
Just a quick question, I have seen both in Kaplan and Bpp revision kits that although the company is a Marginal company for the purposes of Corporation tax, In the answer, the Corporation tax is still taxed at 24% and then marginal relief is given?
Why is this? If it is a marginal company, shouldn’t the profits be taxed at 25% and then Marginal relief given?
Thanks
the marginal tax rate is calculated at 24% less the marginal relief. using the long formula method
A short cut to this (ONLY WORKS at 24% main rate) is to calculate the tax rate up to the lower threshold at lower rate (20%) then calculate anything above lower rate threshold but lower than higher rate threshold at 25%
i don’t understand that ^
so if we have marginal reliefs (company is below the UL and above LL), do we tax at 24% and then deduct the marginal relief?
Thanks for the reply guys,
So why would some examples say Marginal rate is at 25% and also if we are going to tax a marginal rate company at 24% then what is the point of relieving the company losses in a group relief against those companies paying CT at the marginal rate first?
yes tax at 24% then deduct marginal relief.
Shortcut – tax up to lower limit at 20% then anything above lower limit but under higher limit (marginal) tax at 25%
if we have associate companies, we need to divide the UL and LL with the number of associates so both of these figures will go down. so for example, the revised UL is $300 000 and your taxable profit is like $400 000, then do you have to tax it at higher rate 24%? and no marginal relief is given?
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