Mice Ltd property business profit for the year 31 March 2010 is ? 20,550 Period ended Year ended Year ended 31 March 31 March 31 March 2007 2008 2009 ? ? ? Trading profit 83,200 24,700 51,200 Property business profit 2,800 7,100 12,200 Gift aid donations (1,000) (1,500) – (ii) The company profits at the period 31march 2007 is ? 65,000. Also the company profits at 31 March 2008, is ? 24800 for nine month with taxable charges. And on 31 march 2009, ? 56400 taxable, as well as 13,550 on march 2010. (B)
Mice Ltd a business, the Taxman allows you to deduct it from your other income and so reduce your tax bill. At first sight the rules appear generous, allowing carry forward, carry back and even sideways loss relief. But as you would expect, the Taxman applies lots of conditions. One is that if your business ceases and you haven’t been able to get tax relief for all your losses, he won’t let you carry them forward to another business. (C) Mice Ltd Made a purchase of assets 75,000 added to the company profit of 31 March 2010 = 95,550.
Once a year you will get a notice from HMRC to file a company tax return. It’s something that’s worth putting in your diary each year, as it is your responsibility to fill out the tax return even if the notice doesn’t reach you for whatever reason. It involves filling out a company tax return form CT600 plus sending off accounts information prepared by your accountant. HMRC is encouraging businesses to do this online as much as possible. As well as speeding up the process, the tax calculations are done by the website.
Many accountants use special software to prepare company tax returns, and submit them online for you. Even though you are using an expert to complete your company tax return, it’s worth you checking all of the details and ensuring everything is correct. Legally it is the company’s responsibility to ensure the information sent is true and accurate. And it is you – not your accountant – that will have to pay any penalties for getting it wrong. (D) individuals who are resident or ordinarily resident in the United Kingdom (and trustees of various trusts) are subject to a capital gains tax, charged at 18%.
For people paying more than the basic rate of income tax, this increased to 28% from midnight on June 23, 2010. There are exceptions such as for principal private residences, holdings in ISAs or gilts. Certain other gains are allowed to be rolled over upon re-investment. Investments in some start up enterprises are also exempt from CGT. Entrepreneur’s Relief allows a lower rate of CGT (10%) to be paid by people who have been involved for a year with a company and have a 5% or more shareholding.
Every individual has an annual capital gains tax allowance: gains below the allowance are exempt from tax, and capital losses can be set against capital gains in other holdings before taxation. All individuals are exempt from tax up to a specified amount of capital gains per year. For the 2009/10 tax year this “annual exemption” is ? 10,100. Companies are subject to corporation tax on their “chargeable gains” (the amounts of which are calculated along the lines of capital gains tax). Companies cannot claim taper relief, but can claim an indexation allowance to offset the effect of inflation.
A corporate substantial shareholdings exemption was introduced on 1 April 2002 for holdings of 10% or more of the shares in another company (30% or more for shares held by a life assurance company’s long-term insurance fund). This is effectively a form of UK participation exemption. Almost all of the corporation tax raised on chargeable gains is paid by life assurance companies taxed on the I minus E basis. The rules governing the taxation of capital gains in the United Kingdom for individuals and companies are contained in the Taxation of Chargeable Gains Act 1992.