Taxation Case study - Essay Example

The pension contributions made wholly and exclusively for the business purposes are deductible in the accounting period in which the payment is made. However the company may opt to spread it over a period o up to five years, if such contributions have exceeded 210 percent of the previous year's contribution. The capital gains and losses are, generally, calculated in the same way for companies as for individuals. While the net gains are included in the chargeable income, there is no taper relief that applies for individuals available to companies.

No annual exemption is available to companies. Trading losses can be set off against all other income and gains of the accounting period, with provisions available for carry back and carry forward. Capital losses can be set off only against capital gains. This allowance is given at the rate of 4 percent on the eligible expenditure on the construction of industrial buildings or structures that are used for qualifying purposes. For claiming this allowance, the building should have been in actual use at the end of the chargeable period.

A claim of 100 percent can be made if the expenditure is incurred on the construction of certain commercial buildings, including hotels located in enterprise zones. For capital expenditure on certain plant and machinery with at least 25 years of long working life and with a minimum expen. deduction of 25% is available for large companies.The pension contributions made wholly and exclusively for the business purposes are deductible in the accounting period in which the payment is made. However the company may opt to spread it over a period o up to five years, if such contributions have exceeded 210 percent of the previous year's contribution.

Capital Gains:The capital gains and losses are, generally, calculated in the same way for companies as for individuals. While the net gains are included in the chargeable income, there is no taper relief that applies for individuals available to companies. No annual exemption is available to companies.Trading Losses: Trading losses can be set off against all other income and gains of the accounting period, with provisions available for carry back and carry forward. Capital losses can be set off only against capital gains.

Capital Allowances:The following are some of the capital allowances available to the companies:Writing Down Allowance for Industrial Buildings:This allowance is given at the rate of 4 percent on the eligible expenditure on the construction of industrial buildings or structures that are used for qualifying purposes. For claiming this allowance, the building should have been in actual use at the end of the chargeable period. A claim of 100 percent can be made if the expenditure is incurred on the construction of certain commercial buildings, including hotels located in enterprise zones.

Allowances on Plant and Machinery:Writing Down Allowance at the 25 percent on reducing balance method is available for capital expenditure incurred on plant and machinery.For capital expenditure on certain plant and machinery with at least 25 years of long working life and with a minimum expenditure of