Corporation tax in a company's accounts
A company pays tax on its own profit. See where the tax sits in the accounts and what happens when the estimate is wrong.
Task 1Tax on the company's own profit3 questions
A company is a person in law, so it pays tax on its own profit. This tax is called corporation tax.
It is an expense of the company. It is taken off near the foot of the statement of profit or loss, after the line called profit before tax.
Kestrel's profit before tax is £32,000. Corporation tax is 25% here.
In real life the profit is adjusted before the rate is applied. In this room the rate is applied to the profit before tax as it stands.
Task 2Tax owed at the year end2 questions
Task 3When the estimate turns out wrong4 questions