From 1 April 2015 Corporation Tax (CT) is charged at 20% for all companies, except where there are special rates for companies in the oil and gas industry.
Most companies must settle their CT liability 9 months and a day after the end of the accounting period. Large companies or groups generally make 4 quarterly payments on account of CT starting 6.5 months after the start of a 12 month accounting period, with interest running on any balance due until final settlement of the period’s liability.
All companies file CT returns 12 months after the end of the accounting period.
Capital expenditure by companies on ‘intangible assets’, including goodwill, know-how and patent rights, is in general relieved for tax according to the accounting treatment (i.e. by way of depreciation or amortisation).
Companies which carry out R&D work can claim enhanced deductions for qualifying costs of 30% for large companies or 130% for small and medium sized companies. Alternatively, a large company can claim a taxable R&D credit equivalent to 11% of qualifying expenditure, which is offset against its CT liability.
Companies in the creative industries can claim enhanced deductions for certain costs associated with producing highend or children’s TV programmes, video games or theatre productions.
Companies which generate profits from exploiting patents can pay a reduce rate of CT on that patent income.
Trading companies do not pay tax on disposals out of ‘substantial shareholdings’ in other trading companies, that have been held for at least 12 months.