Definition
A Corporation Tax computation is the working that shows how a company gets from the profit in its accounts to its taxable total profits and Corporation Tax bill. HMRC expects one with every CT600: the return, the accounts and the computation are filed online together, with the computation as a single iXBRL file. It lists each tax adjustment, allowance and relief so HMRC can follow the figures on the return.
What a computation shows
- the profit or loss before tax, taken from the accounts
- expenses added back, such as depreciation and client entertaining
- capital allowances claimed
- other income, chargeable gains, and losses used or carried forward
- taxable total profits, the rate applied and any Marginal Relief
For periods ending on or after 1 April 2017, HMRC’s CT600 guidance also asks the computation to identify unused losses carried forward and how losses were used in the period.
Computation vs CT600
The CT600 is the form, with boxes for the final figures. The computation is the supporting schedule that explains how each figure was reached from the accounts. If something needs correcting later, the return can usually be amended within 12 months of the filing deadline.
A full computation is laid out step by step in these worked Corporation Tax calculations. SmartFiling’s Corporation Tax filing service includes the computation, capital allowances and iXBRL tagging.
Related questions
- How is Corporation Tax calculated? Adjust accounting profit to taxable total profits, apply the rate, then deduct any Marginal Relief.
- What is iXBRL and do I need it? It is the tagged format HMRC requires for the accounts and computation filed with every CT600.
Related terms
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Taxable total profits
Taxable total profits are the profits on which a UK company pays Corporation Tax for an accounting period.
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CT600
The CT600 is the Company Tax Return a UK company files with HM Revenue and Customs (HMRC) for each accounting period.
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iXBRL
iXBRL (inline eXtensible Business Reporting Language) is a digital format that adds machine-readable tags to each figure in a set of accounts while keeping the document…
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