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Companies are liable to corporation tax on their taxable total profits (TTP). Companies do not pay capital gains tax, but instead the chargeable gains made on disposal of capital assets held by a company attract a corporation tax liability by being added to TTP.

The definition of ‘profits’ includes the following most common items which are covered in more detail below:

1. •

   trading income

2. •

   chargeable gains

3. •

   dividends which are not exempt

4. •

   non-trading loan relationship income

5. •

   property business income

6. •

   overseas income

7. •

   miscellaneous income

TTP are reduced by qualifying charitable donations (see below). See Example 1 for an illustration of the treatment of qualifying charitable donations and other adjustments.

See the Proforma ― corporation tax computation which sets out a straightforward template, with links to detailed guidance notes for each item. The proforma can also be downloaded in Excel format.

The Checklist ― preparation of the corporation tax computation sets out a list of queries that may be helpful in gathering the information required to complete the computation.