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2. Taxable Total Profits (TTP) A company’s corporation tax liability for an accounting period is calculated by computing profits
(income + gains) from all sources and deducting qualifying charitable donations. This figure is known
as Taxable Total Profits (TTP) and is then charged to tax at the relevant corporation tax rate of 19%.
Pro forma corporation tax computation 2.1. Notes (a)
Dividends received from other UK and overseas companies are not taxable, dividends paid are
not deductible.
(b)
Companies pay corporation tax (not capital gains tax) on chargeable gains (see chapter 19)
3. Royalties payable Relief for royalties payable is given in line with the accounting treatment, and therefore royalties
payable are allowed as a deduction when calculating the adjusted trading profit. No adjustment is
therefore required.
4. Royalties receivable The taxation of royalties receivable will follow the accounting treatment on an accruals basis.
Royalties receivable will therefore be included in the adjusted trading profit, with no adjustment
being required.
Trading income £ £ Adjusted profit
X
Less:
Capital allowances
(X)
Tax Adjusted Trading Profit
X
Other income & gains Interest receivable
X
Property Income
X
Net chargeable gains
X
Total Profits
X
Less : Qualifying Charitable Donations
(X)
Taxable Total Profits X
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