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<b>Tax Tools:</b> Corporation Tax Calculator updated

6th Feb 2006
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Steven Tuckwell, practice manager for Bibby Webb & Co, has provided a variety of calculators to the AccountingWEB membership. His popular Corporation Tax Calculator has now been updated. Steven tells us what these changes mean and how the calculator has been changed to highlight these.

Pre-Budget speech - "Taking account of the costs and benefits of the different options the government takes the view that removing the NCDR and zero per cent rate of corporation tax best meets its objective to better focus tax incentives for re-investment and to reduce administrative burdens on business by simplifying the corporation tax system." - Gordon Brown

This software is the original program developed after the introduction of non-corporate distribution legislation. It is essential for comparing the tax saving (or loss) when operating as a limited company compared to a sole trader.

This legislation has now been scrapped by the Chancellor in the Pre-Budget report on 5 December 2005 and will take effect from 1 April 2006.

Having looked at all the figures, it soon become apparent that the hardest hit companies will be those who do not distribute there profits and retain them for investment. An example of this would be that a company who has profits of say £10,000 and pays only a dividend of £2,000 would find that their corporation tax liability would increase a staggering £1520 to £1900 instead of just the £380 they would have paid in 2005/2006 tax year. That is a massive 400 per cent increase in there corporation tax liability!

It also means that as accountants we are going to have yet another transition period for all company year ends which stagger the 31 March 2006 and yet another complex calculation to prepare. The full details of any rules regarding any franked dividends left at the end of the accounting period have still got to be announced in due course.

So we have been working hard since the Pre Budget Report to adapt the Corporation Tax Calculators to reflect what has already been announced so we can start advising clients of their increase in Corporation Tax Liability and possible even start winding up companies where necessary. We have produced the new pre budget report Corporation Tax Calculator which is available at a cost of just £50.00 and could save you practice hours of work when advising a client.

The calculator now compared the 2005/2006 liabilities to that of the anticipated liabilities for the 2006/2007 liabilities and reports the differences in pounds and percentages. As before it continues to use the matrix formation to show exactly how the budget has affected every company depending on the level of dividend to profits which are drawn. The computations continue to be exact for periods up to 31 March 2006 and will the use the anticipated rules for the 2006/2007 tax year so the end user can see how the computations will be calculated when accounting periods straddle the 31 March 2006.

Corporation Tax Calculator £50.00

Replies (1)

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By User deleted
10th Feb 2006 17:41

There or their?
This may be a good product but I would be reluctant to buy from anyone who does not know the difference between 'there' and 'their!

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