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The Corporation tax calculation template is a self-contained working paper that estimates the current year's corporation tax charge. It adjusts the trial balance profit or loss for disallowable and other tax adjustments, works out the applicable tax rate (including marginal relief where it applies), and compares the resulting estimated charge to the tax already posted to the trial balance so you can see whether an accrual adjustment is needed. It does not require the full Corporation Tax workflow to be in use, and its calculated effective tax rate can optionally feed into the Proof of tax charge template.

Table of contents 

When should I use this template?

Use it wherever you want a quick, self-contained estimate of the corporation tax charge for the year. For example, in a working-papers-only assignment that does not run the full Corporation Tax workflow, during management accounts preparation, or as a supporting calculation alongside the Proof of tax charge template.

Before you start

Make sure the trial balance includes the profit and loss nominal accounts and the corporation tax charge account. The template defaults to account 930000, but the account selections can be changed.

Decide whether you want the comparison run on a yearly basis (comparing to the same period last year) or a monthly basis (comparing to the previous month).

Steps

  1. Yearly/Monthly toggle. Choose whether the comparative column is last year's figure for the same period (Yearly) or last month's figure (Monthly).
  2. Net profit/(loss) for year to date. Pick the profit and loss account range, which defaults to the standard P&L ranges. The value is pulled in automatically but can be overridden.
  3. Disallowable items - Depreciation and Amortisation. Each pulls in automatically from the relevant nominal accounts, defaulted to the standard depreciation and amortisation accounts, and can be overridden.
  4. Add permanent differences. Up to eight free-form rows. Enter a description, pick the account or account range the item relates to, and adjust the amount if needed. The amount defaults to that account's trial balance value.
  5. Other adjustments - Capital allowances and Tax losses. Each pulls in automatically from the relevant accounts and can be overridden.
  6. Further other adjustments. Up to eight more free-form description, account and amount rows for anything else affecting taxable profit.
  7. Adjusted profit. Totals automatically from all of the above, shown for both the current and comparative column.
  8. Exempt ABGH distributions and Number of associated companies. Only shown for periods ending on or after 1 April 2023 where the company's accounts are in GBP. Enter the number of associated companies: companies are associated if one controls the other, or both are under common control. The minimum is 1, including this company itself, and entering 0 triggers a warning telling you to enter 1 instead. These figures are used to work out the applicable profit thresholds and marginal relief.
  9. Tax rate. Calculated automatically once the above is in place, including marginal relief where profits fall between the small and main rate limits, and you can override it. If the adjusted profit is a loss, the rate is automatically set to 0. If the period ends on or after 1 April 2023 but the accounts are not in GBP, no default rate is calculated and you will need to enter one manually. A separate field holds the previous period's tax rate on the same basis.
  10. Estimated tax charge. Adjusted profit multiplied by the tax rate. For long periods that would need to be split across two accounting periods for tax purposes, a warning notes that this calculation does not support that split.
  11. Tax charge to date. Pulled in automatically from the corporation tax nominal account or accounts in the trial balance. This defaults to account 930000 and can be changed.
  12. Adjustment required. The difference between the estimated tax charge and the tax charge to date. This is the accrual movement you may need to post.

Where the period spans two financial years, for periods ending on or after 1 April 2023, a supporting table shows the calculation of the effective tax rate broken down by financial year: proportion of the period, adjusted profits, the main and small rate limits, the tax rate, marginal relief and the resulting tax chargeable for each year. This table is not shown if the effective rate is 0, or if you have overridden the tax rate manually.

What flows through to the rest of the accounts/workflow?

This template does not post anything to the accounts or export any figures for the accounts production package. Its only downstream use is the effective tax rate it calculates. Where a Proof of tax charge template exists in the same assignment, is active and is not hidden, that template can pull this template's effective rate through its Per CT calculation tax-rate option instead of using a flat 19%, 25% or custom rate.

What rolls forward next year?

The account selections for net profit, depreciation, amortisation, capital allowances and tax losses, along with any amount you have manually overridden, carry forward as you left them. Clear an override if you want it to default back to the current year's trial balance value.

The free-form add-back and other-adjustment rows, the tax rate override and the previous-period tax rate field all carry forward the same way.

The number of associated companies and exempt ABGH distributions you enter for the current year do not roll forward into next year's current-year figure. They roll forward only into next year's comparative (prior period) column, pre-filled from what you entered this year, which you can still edit.

Where the data comes from

  • The profit and loss nominal accounts in the trial balance, for the starting profit or loss figure.
  • The depreciation, amortisation, capital allowances and tax losses nominal accounts, or whichever accounts you select, for the default values in those rows.
  • The corporation tax nominal account or accounts in the trial balance, for the tax charge to date.
  • Whatever you enter directly in the permanent difference rows, other adjustment rows, associated companies, exempt ABGH distributions and tax rate fields.

Frequently asked questions

Why isn't "Per CT calculation" available as a tax rate option in the Proof of tax charge template?

It only appears once a Corporation tax calculation template exists in the same assignment, is active, and is not hidden.

Why is my tax rate blank instead of showing a default?

This happens for periods ending on or after 1 April 2023 where the company's accounts are not in GBP. The template does not calculate a default rate in that case, so enter one manually.

Why am I seeing "Zero is not allowed. Please enter 1"?

You have entered 0 for the number of associated companies. The minimum is 1, because the company itself always counts.

Why does the tax rate show as 0% when there's a loss?

The template automatically sets the rate to 0 whenever the adjusted profit for the period is negative, since no tax is due on a loss.

Why does the calculation show two financial years side by side?

This happens when the accounting period straddles a financial year boundary, for example a year end other than 31 March once the post-2023 rules apply. Profit and tax are apportioned between the two financial years and blended into a single effective rate.

This template gives an estimate, not a filed computation. Where the period is long enough to need splitting across two accounting periods for tax purposes, the template warns you and does not handle the split, so use the full Corporation Tax workflow for those cases.