Calculating the CT liability - part 2

In this lesson

1. 0:00 Calculating corporation tax liability
2. 0:37 Understanding augmented profits and rate determination
3. 2:15 Handling associated companies and profit limits
4. 3:04 Applying marginal relief with associates
5. 5:07 Accounting for short periods and proration
6. 7:38 Straddling financial years and dual rates

About this lesson

The video walks you through three essential scenarios: applying the correct tax rate based on augmented profits, handling associated companies and adjusted profit limits, and dealing with accounting periods that straddle the 1st of April 2023 when corporation tax rates changed. You'll see how to distinguish between taxable trading profit and augmented profits, determine whether marginal relief applies, and prorate limits when needed—all with worked examples showing the full calculation from start to finish. The key methodology involves calculating augmented profits (trading profit plus dividends from unconnected companies), identifying how many associated companies exist, adjusting the lower and upper profit limits accordingly, and then applying the correct rate: 19% for profits in financial year 2022, or the small rate, main rate, or marginal relief for financial year 2023 onwards. The video emphasises a critical rule: always tax the trading profit itself, never the augmented profit figure. Three detailed examples show how to handle different scenarios—companies with subsidiary dividends, companies with associates that change during the year, and companies with accounting periods crossing the April 2023 threshold. By the end, you'll confidently calculate CT liabilities and understand why each step matters for exam success.

Duration: 11m