Definition
Taxable total profits are the profits on which a UK company pays Corporation Tax for an accounting period. They start from the profit in the company’s accounts, adjusted for tax rules, and include trading profits, investment income and chargeable gains, less reliefs such as losses. The figure goes in box 315 of the CT600, “Profits chargeable to Corporation Tax”, and is the amount the tax rate is applied to.
From accounting profit to taxable profit
HMRC’s guidance is clear that the profit or loss for Corporation Tax differs from the one in the accounts. Typical adjustments are:
- adding back costs the tax rules disallow, such as client entertaining and depreciation
- deducting capital allowances on equipment, machinery and vehicles, which take the place of depreciation for tax
- deducting reliefs such as trading losses brought forward
- adding chargeable gains and other income not already counted
Example
Harrow Print Ltd’s accounts show a profit of £60,000 after charging £4,000 of depreciation and £1,000 of client entertaining. It claims £6,000 of capital allowances. Its taxable total profits are £59,000: £60,000 plus £4,000 plus £1,000, minus £6,000.
These adjustments are set out in the Corporation Tax computation filed with the CT600. For fuller worked examples, see how to calculate Corporation Tax.
Related questions
- How is Corporation Tax calculated? Work out taxable total profits, apply 19% or 25%, then deduct any Marginal Relief.
- How can I reduce my company's Corporation Tax legally? Claim every allowable expense, capital allowance and relief; see these ways to reduce Corporation Tax legally.
Related terms
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Corporation Tax
Corporation Tax is the tax UK limited companies pay to HM Revenue and Customs (HMRC) on their taxable profits.
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Corporation Tax computation
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.
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Capital allowances
Capital allowances are the tax relief a UK business gets when it buys equipment, machinery, vans and other assets it keeps to use in the business…
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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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