3 - Taxation of individuals

Question 1

Direct taxes

Answer 1

Imposed by reference to an individual’s circumstances:

income tax, CGT, corporation tax

Question 2

Indirect taxes

Answer 2

Imposed by reference to transactions:

VAT, SDLT

Question 3

Income receipts

Answer 3

Income generated on a regular basis:

trading profits, interest charged on loans, rent

Question 4

Capital receipts

Answer 4

product of one-off transactions

Question 5

Income expenditure

Answer 5

expenses integral to day-to-day trading:

bills, staff wages, repairs

Question 6

Capital expenditure

Answer 6

one-off expenses bringing capital asset for an enduring benefit:
equipment, property, enhancing a capital asset

Question 7

Mr X sells an oil painting he inherited from his mother. What kind of receipt is this?

Answer 7

Capital receipt

Question 8

Mrs X sells shares in ABC plc. What kind of receipt is this?

Answer 8

Capital receipt

Question 9

Mr Y runs an antique shop. He sells a painting and a grandfather clock. What kind of receipt is this?

Answer 9

Income receipt - sold in the course of his trade as an antiques dealer; this is how he generates money on a regular basis

Question 10

Mrs Y receives interest on her bank account of £525. What kind of receipt is this?

Answer 10

Income receipt

Question 11

Mrs Y receives rent from furnished lettings of £12,000. What kind of receipt is this?

Answer 11

Income receipt