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Corporate Tax: Allowances & Reliefs

  • Posted 10th August 2015

Corporate Tax: Allowances & Reliefs

Corporate taxes liable on the taxable profits made by the businesses in the UK during a particular accounting period. Although the corporate tax is a bit complex, it is manageable if handled properly. The main rate of Corporation Tax currently lies at 20%. However, according to the announcement made by the Chancellor, it will drop from 20% to 19% in 2017 and further to 18% in 2020 for the purpose of benefitting the businesses in the UK. When calculating your taxable profit, business expenses are usually deducted from your income. And, the purchase of assets is not available. However, for the purchases of plant and machinery that is used in your company, capital allowances can be claimed. Capital allowances can be claimed for company cars as well. In few cases, you can claim capital allowances in relation to capital expenditure on premises. Corporation tax reliefs are available on research and development (R&D) costs. Likewise, you can claim for patent box if your company makes profits from its patented inventions. This patent box allows your company to apply a lower rate of 10% Corporation Tax to the profits earned after 1 April 2013 from its patented inventions. If you are closing your company to become a sole trader or a limited partnership, then you can make a claim for disincorporation relief. Also, if your company had profits between £300,000 and £1.5 million before 1 April 2015 and from oil rights or extraction in the UK or UK continental shelf, you can be able to claim for marginal relief. As such Corporation Tax reliefs and allowances can minimise your tax liability, you can invest your time to understand and learn about them. To ensure you get to claim reliefs and allowances, accountants can help you make full use of such benefits in your corporate tax return.

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