Definition
A tax computation is the working that turns the profit shown in a company's accounts into the profit chargeable to Corporation Tax. It is filed with the CT600 in iXBRL.
Why it is needed
The profit in the accounts follows accounting rules. Tax rules are different, so the tax computation starts with the accounting profit before tax and adjusts it to arrive at the profit Corporation Tax is charged on.
Typical adjustments
- Added back: costs the accounts deduct but tax does not allow, such as depreciation, client entertaining, and fines and penalties.
- Deducted: capital allowances, and income that is not taxed, such as most dividends received from other companies.
- Then: losses brought forward or carried back and other reliefs, to reach the taxable total profits.
In Tax Optimiser
Tax Optimiser builds the computation from your trial balance, applies the adjustments and reliefs you enter, and files it in iXBRL alongside the accounts and the CT600.
Read more: The Corporation Tax computation and Reviewing your documents.