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Corporation Tax Estimate

**Limited Companies Only**

The corporation tax estimate feature on the Xenon Connect dashboard provides a tailored and automatic estimate of corporation tax for the current and previous 2 financial years.

The estimate allows the business owner and their accountant to gain real-time insight into the business’s upcoming corporation tax liability.

The calculation behind the corporation tax estimate considers common tax adjustments required to the accounting profit (as produced by Xero) in order to reach the taxable profit (as used as a basis for the calculation of tax payable). This provides a much more accurate estimate of corporation tax payable when compared to merely multiplying the net profit by the rate of corporation tax.



It is recommended that you request that your accountant help you set up these settings.

Disallow / Addback Expenses – Xenon Connect allows you to specify income and expenditure account codes in Xero which should not be considered for the purposes of reaching a taxable profit figure for the company.

By default, the following common “add-backs” are already adjusted in settings:

  • Depreciation Expense
  • Entertainment – 0%

By default, the full value of income/expense accounts added here are disallowed (i.e. 100%).

If you wish to merely disallow/add back a proportion of the income/expense, then the toggle and input box allows you to specify a different percentage.


Deduct Capital Allowances in Fixed Asset Additions – This section allows you to specify the taxable treatment of the various fixed asset “cost” accounts in Xero.

The options are as follows:

  • No writing down allowance available
  • 18% General Pool Writing Down Allowance
  • 6% Special Rate Pool Writing Down Allowance
  • Custom % (by enabling the toggle) – This allows you to specify a different percentage to apply as a capital allowance/tax deduction. For example, if you wish to apply the Annual Investment Allowance to all purchases in a fixed asset account code, then you would apply a rate of 100% here.

Deduct Other Items – This section allows you to specify other Xero account codes that require further adjustment for corporation tax purposes.

Again, you are able to specify the percentage to be deducted as appropriate. Therefore, for example, you could apply the effect of enhanced R&D tax credit relief to a particular Xero account code here.

Note that any account codes added to this section are at risk of being deducted from/added back to profits twice.

Rate of Corporation Tax

Xenon Connect automatically provides the UK rate of corporation tax and any changes in the rate, to ensure that the correct rate of corporation tax is applied to the correct tax year.

Where your business’s financial year straddles the date of a change in the rate of corporation tax, then Xenon Connect applies the 2 different rates by pro rata of the taxable profits.

Corporation tax rates applied in Xenon Connect can be overridden, if required.