Corporation tax

[Jackleman]

There is a good chance a business of mine may make a reasonable profit this year, I do not want to pay corporation tax and would prefer to invest the surplus to then create the same situation the following year and do the same etc year after year.

The question is what safe, but good investments would be good for a small business to buy without attracting any more tax. Can a business buy shares on the FTSE for instance?

Thanks

[NoelWatson]

Jackleman said:

There is a good chance a business of mine may make a reasonable profit this year, I do not want to pay corporation tax and would prefer to invest the surplus to then create the same situation the following year and do the same etc year after year.

The question is what safe, but good investments would be good for a small business to buy without attracting any more tax. Can a business buy shares on the FTSE for instance?

Thanks

It can buy shares, but my understanding is that you can offset gains/losses.

[Eric Mc]

A company pays Corporation Tax on its taxable trading profits. Investing surpluses in capital assets on the whole will not reduce the profit for tax purposes. The main exception to this would be the purchase of plant and machinery which might be eligible for the 100% Annual Investment Allowance. Currently, a business can buy up to £100,000 worth of such assets in a given year. However, the limit is being reduced to £25,000 in April 2011.

[sumo69]

Eric

Actually its April 2012, giving businesses a 21 month window to acquire plant and equipment and get £100k per tax year with a 100% tax write-off.

D

[Eric Mc]

sumo69 said:

Eric

Actually its April 2012, giving businesses a 21 month window to acquire plant and equipment and get £100k per tax year with a 100% tax write-off.

D

The recent budget severely cut back the amount of capital expenditure that is eligible for the 100% AIA. And I agtree, these changes to Capital Allowances come into effect in April 2012.