BTC Exam - how to treat rental income and dividends.
becs129
Registered Posts: 17 New contributor 🐸
Ok I haven't got much to ask on this because I'm that clueless.
Is rental income taxable, if so where does it come into the calculation? (adj. profit or PCTCT stage)
And when do we add dividends in if at all? All I can hear is "gross up the dividends" which I am not going to forget to do, but when do you add them in?!
Is rental income taxable, if so where does it come into the calculation? (adj. profit or PCTCT stage)
And when do we add dividends in if at all? All I can hear is "gross up the dividends" which I am not going to forget to do, but when do you add them in?!
0
Comments
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Hi Dividends are grossed up and added to the PCTCT to get the taxable profits.
PCTCT = 200000
Dividends = 25000
Profits = 225000
Then you would go on to calcuate the corporation tax payable. If you had to use the fraction for calculating the relief 'I' = PCTCT and 'P' would be the profits.
As for the rental income this is taken away on the proforma when calculating the adjusted trading profits. After adding back the disallowable expenditure you then take away any other income like profits generated from sales, rental income etc.
Hope this helps !0
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