Profit and losses and corporation tax

[bob]

I have a question about trading profit and losses and corpo tax

I have a company and it made a loss last year, can I use the loss to reduce down my corporation tax liability this year?

Silly question but how is corporation tax calculated is it:

Earnings less admin expenses = profit multiplied by 12.75% = corpo tax

Or it there other items like depreciation etc that are added to the profit before calculating corpo tax?

Where does the loss I made the previous year come into it?

 

[Graham_07]

CT is calculated on profit as adjusted for tax purposes, this would be
Profit per accounts
+ depreciation
+ any non-allowable expenses
= Adjusted profit

You are then allowed Capital Allowances ( instead of depreciation) on allowable fixtures/fittings/Equipment/Vehicles . This is because depreciation and Capital Allowances may sometimes be calculated on different bases.

So CT is then on Adjusted Profit - Capital Allowances

If you have a prior year loss that comes into the current year and is allowed against current year profits.

CT is then 12.5% on the excess.

If the company is a close company ( controlled by 5 or fewer participators) and is providing a professional service there may be additiona CT due under what is called the close company surcharge. There may also be higher CT if the company is in receipt of rental or investment income.

 

[Breninio]

It may also be possible for you to carry the loss back to the year before the loss arose assuming there are sufficient profits in that year to absorb the loss and the time limit for such a carry back has not expired(i.e. a claim must be made within 2 years of the end of the accounting period in which the loss arose). The main benefit is that it may result in a refund of corporation tax for that previous year. However, if there is a current year liability that is due soon that can be reduced by carrying the loss forward then there may not be much of a cash flow advantage