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Business Tax Computations Flashcards

6 cards from real AAT L4 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Business Tax Computations flashcards as text

  1. A limited company has accounting profits of £180,000. It includes depreciation of £20,000 and capital allowances are £35,000. The company donated £5,000 to a political party (non-deductible). What is the taxable trading profit?

    Answer: £160,000

    Start with accounting profit £180,000. Add back depreciation (£20,000) and political donation (£5,000) = £205,000. Deduct capital allowances (£35,000) = £170,000. Wait — add back donation: £180,000 + £20,000 + £5,000 − £35,000 = £170,000.

  2. For corporation tax purposes, what is the time limit for submitting a company tax return (CT600) after the end of the accounting period?

    Answer: 12 months

    A company must submit its CT600 corporation tax return within 12 months of the end of its accounting period, regardless of when tax is due to be paid.

  3. A company purchases plant and machinery for £100,000. It qualifies for the Annual Investment Allowance (AIA). The AIA annual limit is £1,000,000. What capital allowance can the company claim in the first year?

    Answer: £100,000 (full AIA)

    The AIA allows a 100% first-year deduction on qualifying plant and machinery purchases up to the annual limit. Since £100,000 is well within the £1,000,000 AIA limit, the full £100,000 can be claimed.

  4. A company makes a trading loss of £80,000 in its accounting period. It had trading profits of £50,000 in the previous year. Under terminal loss relief / loss relief rules, what is the maximum the company can carry back?

    Answer: £50,000 (the previous year's profits)

    Trading losses can be carried back one year under s37 CTA 2010. The maximum that can be relieved against the previous year is limited by the previous year's profits (£50,000). The remaining £30,000 is carried forward.

  5. A company's corporation tax liability is £180,000 and it is not a 'large' company. When must this tax be paid?

    Answer: 9 months and 1 day after the end of the accounting period

    Non-large companies must pay corporation tax 9 months and 1 day after the end of the accounting period. Quarterly instalments only apply to large companies (profits over £1.5m).

  6. A company receives a dividend of £18,000 from a UK company in which it holds 5% of the shares. How is this dividend treated for corporation tax?

    Answer: Exempt from corporation tax as a small company dividend

    Dividends received from UK companies are generally exempt from corporation tax under Part 9A CTA 2009. A 5% shareholding qualifies as a 'small company' holding and the dividend is exempt.