Loss of Starting Rate of Corp Tax

PoorDave

Am i correct to think that the starting rate of 0% on your first £10k of profit, followed by taper relief up to £50k has gone, and the 19% rate applies from 0 to £300k now?

Where does this leave a business that was making a 56k gross profit, 16.5k net profit? The tax comes out of the gross profit, right? So an extra roughly 10k would be payable, making said business suddenly a lot less attractive?

I should add that the business in question is one i am considering purchasing, and i have only today received the last 3yrs financial statements/account, and also that i am very tired!

this_here_giraffe_laughed

The 0% rate was abolished from 1 April 2006 - in the PR gumph Mr. Brown focussed on a tiny change to capital allowances which is only a timing adjustment rather than saving any overall tax!

Assuming you are purchasing a company, corporation tax is payable on net profit and would be at 19% for a small company. Taper relief applies to personal capital gains and not to companies at all.

Aark

'Taper relief' isn't quite the right term, it should be 'marginal relief'.

Corporation tax is due on profits chargeable to corporation tax, which would include the net profit (after adjustments for capital allowances etc). Tax is not calculated on gross profit.

PoorDave

I have discovered i was using the wrong word in the meantime, so you're right to point that out.

Also figured out where the tax goes.

In employment, net pay is what i get after tax is deducted, so i was wondering why it doesn't seem to be the same for a company, i.e. the net figure is before tax is deducted, as far as I understand it? Is it me or is that confusing? (probably me!)