UK Corporation Tax Calculator

corporation_tax.rb

class CorporationTax

  def self.calculate_ct(profit, period_start_on, period_end_on)
    if period_end_on < Date.new(2023, 4, 1)
      calculate_ct_before_2023(profit)
    elsif period_start_on >= Date.new(2023, 4, 1)
      calculate_ct_after_2023(profit)
    else
      period_split = split_periods(period_start_on, period_end_on)
      period_1_profit = profit * period_split[0] / (period_split[0] + period_split[1])
      period_2_profit = profit * period_split[1] / (period_split[0] + period_split[1])
      calculate_ct_before_2023(period_1_profit) + calculate_ct_after_2023(period_2_profit, period_split[1])
    end
  end

  def self.calculate_ct_after_2023(profit, days=366.0)
    lower_limit = 50_000
    upper_limit = 250_000
    main_rate = 0.25
    small_profits_rate = 0.19
    marginal_relief_fraction = 3.0 / 200

    if profit <= lower_limit
      tax = profit * small_profits_rate
    elsif profit > upper_limit
      tax = profit * main_rate
    else
      adjusted_upper_limit = upper_limit * days / 366.0
      marginal_relief = (adjusted_upper_limit - profit) * marginal_relief_fraction
      tax = (profit * main_rate) - marginal_relief
    end

    tax
  end

  def self.calculate_ct_before_2023(profit)
    tax = profit * 0.19
    tax
  end


  def self.split_periods(period_start_on, period_end_on)
    [Date.new(2023, 3, 31) - period_start_on + 1, period_end_on - Date.new(2023, 4, 1) + 1.0]
  end
end