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BLP > 3. Tax > Flashcards

3. Tax Flashcards

1
Q

When do you deduct an individual’s personal allowance

A

After net income (after subtracting reliefs)

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2
Q

What is the TWDV in the first year of capital allowance

A

AIA + any tax paid at 18%

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3
Q

What happens if loan + close company waived/repaid

A

Refund of CT paid

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4
Q

How can you reduce an individual’s TTP

A

Pay into pension, give shares to spouse or put money into ISA

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5
Q

What does EVERY person have deducted from CGT

A

Annual exemption

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6
Q

Example of an ‘item’ exempt from paying VAT

A

Sale of buildings, unless new or Seller opts to tax

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7
Q

What kinds of expenditure are capital

A

One-off

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8
Q

What do you not include when working out chargeable gains (type of expenditure)

A

Capital expenditure - like purchase of a building

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9
Q

What is the effect of hold-over relief for the donee

A

Deemed MV received reduced by donor’s deemed gain (TCG)

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10
Q

Why are items w/ 0% VAT payable so attractive

A

Bc can still recover input VAT paid

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11
Q

What should you do if transactions in securities rules apply

A

HMRC for advance clearance

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12
Q

Why consider chargeable gain first for company loss relief

A

Bc capital loss can only be claimed against chargeable gain

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13
Q

What does close company pay on loan

A

CT within 9 months and 1 day

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14
Q

What do you need to know to work out CGT, unless relief applies

A

Taxable Income, to know what rate of tax they pay

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15
Q

When will transactions in securities rules apply

A

If transaction w/ close company changes income to capital, e.g. winding up instead of dividend

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16
Q

Three kinds of expenditure that can be deducted from sale proceeds in CGT

A

Disposal, initial and subsequent

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17
Q

What non-income expenditure can be deducted from an individual’s income to reduce tax

A

Depreciation (capital allowance for companies)

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18
Q

Two kinds of tax rate reliefs available to individuals on CGT

A

Investors and entrepreneur relief

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19
Q

What happens if net income is £100k or more for personal allowance

A

Reduce by £1 for every £2 over £100k

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20
Q

What is the tax effect for the recipient of loan from close company

A

If written off, deemed to receive equivalent dividend

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21
Q

What kinds of items only have 5% VAT on them

A

Domestic heating, children’s car seats

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22
Q

Rules on claiming capital loss relief

A

Only against chargeable gain, starting in the same year and then going FORWARD ONLY

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23
Q

What kind of profits do you consider first for loss relief for company

A

Chargeable gain

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24
Q

What will CT be for loan from close company

A

32.5%

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25
Q

When is VAT payable

A

Taxable supply of UK made goods by taxable person for business

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26
Q

What is the rule on capital allowances

A

AIA of £200k in one year, then 18% on remainder over that, reducing balance each year

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27
Q

How many steps to income tax calculation

A

7

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28
Q

What is the value of the good for CGT if consideration given between connected at undervalue/gift, or unconnected at undervalue

A

MV

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29
Q

Two kinds of business reliefs applicable to CGT

A

Holdover and rollover

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30
Q

What is the first possible tax deduction available for savings

A

If within first £5k of taxable, 0%

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31
Q

What is a ‘wasted tangible’

A

Not expected to last for longer than 50 years

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32
Q

What kinds of subsequent expenditure can be deducted for CGT

A

Either protecting title OR increasing value of the item

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33
Q

What do you ALWAYS ignore for corporation tax (receipt/payment by company)

A

Dividends received or paid - ALWAYS EXEMPT

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34
Q

What is the tax rate if investors or entrepreneurs relief applies

A

10%

35
Q

When does entrepreneurs relief apply to disposal of shares in a business

A

Trading, 1 year prior, 5% OS and employee/officer OR ceased + 3 years after + 1 year prior + 5% OS + employee/officer

36
Q

What is allowable expenditure for chargeable gains under corporation tax

A

Same as for individual (initial, subsequent, disposal) but no AE/ER

37
Q

Second step in income tax calculation

A

Subtract tax reliefs

38
Q

What is the rate of VAT in the UK

A

20%

39
Q

When does hold-over relief apply

A

Gift/UV

40
Q

Kinds of items with only 0% VAT payable

A

kid’s clothes, books

41
Q

What kinds of tax do both companies and individuals pay

A

VAT

42
Q

When do you consider relief for companies

A

After deducting possible deductions (losses reduce tax payable)

43
Q

What does ‘control’ mean for a close company

A

+50% voting altogether

44
Q

When must rollover relief be claimed

A

12 months before and up to 3 years after

45
Q

When does entrepreneurs relief apply to disposal of a business asset

A

1 year prior, 3 years since ceasing, used in the business

46
Q

Three things you can deduct from income profits for corporation tax

A

Deductible expenditure, capital allowances and trading losses

47
Q

What happens for CGT if spouse gives item to spouse

A

No gain/loss, so spouse takes on the base cost of the item

48
Q

What is the effect of rollover

A

total chargeable gain reduces base cost of replacement indefinitely

49
Q

What kind of business relief only applies for business assets

A

Rollover

50
Q

If TTP of company is more than £1.5m, when pay?

A

4 instalments in relevant period and following.

51
Q

Three things on which an individual does NOT pay CGT when they dispose of it

A

Wasted tangible, private cares and one principal private residence

52
Q

Three things you can deduct from chargeable gains for corporation tax

A

Allowable expenditure, indexation allowance and capital/trading losses

53
Q

How to split NS, S and D

A

Deduct S and D from taxable income = NS

54
Q

First step in income tax calculation

A

Add all income together

55
Q

What is the value of the good for CGT if consideration given at arm’s length

A

Price paid

56
Q

When is personal allowance no longer available

A

If £123,700 or more

57
Q

What kind of income has a different rate of tax applicable to it

A

Dividend

58
Q

If TTP of company is £1.5m or less, when pay

A

Within 9 months and 1 day

59
Q

What kinds of tax do individuals pay (x2)

A

Capital gains and income

60
Q

When do you get Taxable income

A

After deducting individual’s personal allowance

61
Q

By when must VAT invoice be sent to client

A

30 days

62
Q

Need the replacement asset be the same as the original asset to claim rollover?

A

No

63
Q

Qualifying assets for rollover relief

A

land/goodwill/P&M/ships/aircraft/potatoes

64
Q

Two expenditures not deductible from income profits for corporation tax, bc prohibited by statute

A

Business entertainment or provision for doubtful debts

65
Q

Rules on claiming trading loss relief

A

Start same period against income profits and chargeable gain, then back one year CG + TT if SAME TRADE, then future TT ONLY if SAME TRADE

66
Q

When must an individual register to pay VAT

A

If exceed VAT threshold

67
Q

What do ‘capital allowances’ apply to

A

Plant and machinery

68
Q

When is tax NOT payable by close company on loan to individual

A

In ordinary course of business or less than £15k to full-time employee

69
Q

What is the corporation tax rate for companies 18/19

A

19%

70
Q

What is ‘deductible expenditure’ for income profits under corporation tax

A

Expenditure incurred wholly and exclusively for the purpose of a business of income nature, and not prohibited by statute

71
Q

What kind of tax do companies pay

A

Corporate

72
Q

Examples of tax reliefs from individual’s income

A

Interest on qualifying loans and pension contributions

73
Q

Examples of expenditure of an income nature for ‘deductible expenditure’

A

Wages, advertisement, interest on loan, IP/goodwill

74
Q

What kinds of expenditure are income

A

Regular business expenses

75
Q

Why is corporation tax essentially double tax

A

Company pays tax, then dividend to shareholders - they also pay tax

76
Q

Does annual exemption reduce either hold-over or rollover relief

A

No - although donee can use it when disposing of the asset for hold-over

77
Q

What does the individual account to HMRC for in VAT

A

Difference between input and output

78
Q

What liability does the donor have for hold-over relief

A

None

79
Q

What is a close company?

A

Under control of either 5 or less Ms, or any number of Ms who are also Ds

80
Q

When can company claim rollover relief

A

Qualifying asset disposal + purchase means capital gain on disposal reduces cost of replacement

81
Q

When does hold-over relief not apply

A

To business assets, or quoted shares

82
Q

When does entrepreneurs relief apply to disposal of a business

A

1 year prior and trading

83
Q

When does investors relief apply

A

Not officer/employee, not listed when bought, 3 years since 17 March 2016, fully paid OS

84
Q

When do you calculate if personal savings allowance is available

A

From Taxable Income

BLP (18 decks)

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