ATX Cards Flashcards
1
Q
What is the deemed salary pro-forma?
A
95% of fees
Deduct any salary & employers NI
Deduct any employer pension contributions
Deduct any expenses allowable for employee
Leaves amount deemed to include employers NI
Deduct employers NI from amount
Deemed salary
2
Q
What are the badges of trade
A
- The subject matter
- Frequency of transactions
- Length of ownership
- Supplementary work
- A profit motive
- How the asset was acquired
3
Q
What qualifies for gift holdover relief?
A
Chargeable assets used in a business
Shares in trading company (need a minimum 5% holding if quoted)
Any asset with an immediate IHT charge
Any asset transfer which qualifies for IHT Business Property Relief or Agricultural Property Relief
4
Q
When are proceeds from part disposals of land deducted from the cost of the land?
A
Gross proceeds <= 20% of MV of the whole plot
Gross proceeds <= £20k
Aggregate sales of land and buildings in the year <= £20k
5
Q
What are the conditions for a furnished holiday let?
A
EEA Property
Available to the public for 210 days in a year
Actually let for 105 days in the year
Property not let for > 31 days
6
Q
How are losses carried forward for furnished holiday lets?
A
Only against future furnished holiday let profits
7
Q
What qualifies for business asset disposal relief?
A
All/part of an unincorporated business (owned ≥ 2 years)
Assets used in a business (held for 2 years) where trade ceases and assets sold <3 years
Shares in a trading company, owned for ≥ 2 years, ≥ 5% holding (or emi shares) and employee/director
Associated disposals (owned personally and used in your partnership / personal co.) where selling ≥ 5% of share in the bus. at the same time
£1m lifetime limit at 10% rate
8
Q
IR35 criteria
A
Individual provides services to a client via a PSC
Individual would be an employee if not for PSC
Individual has ≥ 5% interest in the company
9
Q
What is the deemed direct payment (DDP) pro-forma?
A
Payment made to PSC (net of vat)
Less: Direct cost of materials incurred by the PSC.
Less: Deductible employee expenses incurred by the PSC
Deemed direct payment
10
Q
What are the criteria for SAYE?
A
All employees can participate but the employer can set a minimum period of employment.
Maximum £500 of net income can be saved per month.
Scheme can run for 3 or 5 years.
Max 20% discount of share price at grant date vs MV at grant
No Tax or NI paid on interest earned on savings
Gain = Proceeds less exercise price
11
Q
What are the criteria for CSOP?
A
Employer chooses who can participate.
Employee must be full time/part time while directors must be full time
£30k max value of shares per employee
Employee must own <= 30% of company shares
Exercise period is 3-10 years after grant
Issue price must be >= MV of shares at grant date
Gain = Proceeds less exercise price
12
Q
What are the criteria for EMI?
A
Employer chooses who can participate.
Employee must work >= 25 hours per week
Employee must own <= 30% of company shares
£250k max value of shares per employee, £3m overall for scheme
Exercise period is <= 10 years after grant
Issue price must be >= MV of shares at grant date (otherwise chargeable to income tax on exercise)
Gain = Proceeds less exercise price
13
Q
What are the criteria for SIPs?
A
Open to all employees, no employer restriction
Max value:
Given free shares: £3.6k p.a
Buy partnership shares: £1.8k p.a (cost deducted from gross salary, capped at 10% of salary)
Given matching shares: Max of 2 per partnership share
Holding period - 5 years
Income Tax
>=5 years - No IT or NICs
3-5 years - IT (& Class 1 NICs if quoted) on lower of grant value (cost for partnership) and MV at withdrawal date
3 years - IT (& Class 1 NICs if quoted) on MV at withdrawal date
CGT
Gain = proceeds less MV at withdrawal date
Dividends received are tax free if re-invested in partnership shares + shares are not withdrawn within 3 years.
14
Q
What’s the criteria for Investors’ relief?
A
New shares issues after 17/3/16
Held for at least 3 years
Unquoted trading co
Investor never worked for the company
15
Q
How are normal trading losses treated for individuals?
A
Set against total income.
CY or
PY or
CY then PY or
PY then CY
Chargeable gains can be relieved after the total income claim in a particular tax year
16
Q
How are normal trading losses treated for companies?
A
Set against total profits
CY then PY (CY must be used first, all or nothing)
17
Q
How are carried forward trading losses for individuals treated?
A
Against future profits of the same trade
18
Q
How are carried forward trading losses for companies treated?
A
Against future total profits (choose how much)
19
Q
What is the treatment of losses in the opening years of trade?
A
Losses in any of the first 4 tax years can be carried back on a FIFO basis and set against total income.
Go back 3 years and work forward
17 -> 18 -> 19 and then the loss in the 20
Note- 50k/25% cap applies
20
Q
What is a terminal loss and how is it calculated? (Individuals)
A
A terminal loss is the loss in the last 12 months of trading.
It is calculated in two parts:
6 April (start of tax year) to Cessation date - Trading loss + overlap profits (nil if profit)
PLUS
Remainder of final 12 months up to 5 April
21
Q
What is the treatment of terminal losses for individuals?
A
Terminal losses can be set against trading profits on:
year of cessation
and the 3 preceding tax years on a LIFO basis
22
Q
What is the treatment of terminal losses for companies?
A
Terminal losses can be set against total profits on:
year of cessation
and the prior 36 months on a LIFO basis
23
Q
What is the cap on individuals loss relief?
A
Higher of:
- £50k
- 25% of adjusted total income (total income less gross personal contributions)
Applies to:
Normal loss relief
Opening years of trade loss relief
24
Q
What is the restriction on relief for trading losses brought forward for companies?
A
£5m + 50% of excess profits over £5m
25
How are finance costs on residential properties treated from a personal tax perspective?
They are relieved at 20% from the tax payer's income tax liability
26
How is adjusted net income calculated?
Total income
Less:
Loss relief
Qualifying interest
Gross personal pension contributions
Gross gift aid contributions
27
How is adjusted income calculated for employees?
Net income (TI - loss relief - QLI) + employee contributions to occupational pension + employer contributions to occupational or personal pension
28
How is adjusted income calculated for self employed calculated?
Net income
29
How is threshold income calculated?
Net income less gross personal pension contributions
30
How does the tapered allowance work?
The normal allowance is £40k.
This is reduced by £1 for every £2 when AI is > £240k
Note:
Threshold income has to exceed £200k for tapering to apply
31
How many years can an unused pension annual allowance be carried forward for?
3 years after the current period
32
What happens when total gross contributions exceed the available annual pension allowance?
An annual allowance charge.
The charge will be at the margin rate of tax for the tax payer
Note:
This includes both individual and employer contributions
33
How are pensions upon retirement treated?
Tax free amount - 25% of lower of fund or lifetime allowance of £1,073,100
Additional amounts up to lower of fund or lifetime allowance are treated as NSI
Any excess is liable to a 55% charge if taken as a lump sum
If used to buy an annuity, charge of 25% and income taxed as NSI
34
What are the deemed occupation criteria under PPR relief and the respective conditions?
Last 9 months of ownership - must have occupied the residence at some point
Up to 3 years of absence for any reason - occupation before and after absence
Up to 4 years of absence whilst working elsewhere (employer or self employed) - occupation before absence (no need to reoccupy if work prevents)
Any period where an employee is required to work overseas - occupation before absence (no need to reoccupy if work prevents)
35
How is PPR relief calculated?
Gain x (Periods of actual or deemed occupation/total period of ownership)
36
What are exempt assets from CGT?
Wasting chattels
Non-wasting chattels bought and sold for <£6k
Legal tender e.g cash
Cars
ISA investments & shares
QCBs (Qualifying Corporate Bonds)
Gilts
National Savings Certificates and Premium Bonds
37
Who are connected persons?
An individual is connected with their direct relatives (and their spouses), business partners (and their spouses) and the companies they control
38
How are disposals and losses treated for connected persons?
Disposals are at MV
Losses can only be used on gains by the same connected person
39
What are the £6k non-wasting chattel scenarios?
Proceeds & Cost <£6k - exempt
Proceeds & Cost >6k - Normal gain
Proceeds >6k & Cost <6k - lower of normal gain or 5/3 * (Proceeds - £6k)
Proceeds <6k & Cost >6k - Limit loss to deemed proceeds of 6k less cost
40
What is the ex-gratia amount and how is it treated for Tax and NI?
The amount is £30k.
Payments within the £30k band are exempt from tax or NIC.
The excess is subject to tax and Class 1A.
41
How is statutory redundancy pay treated?
It is **fully exempt** but it also forms part of the £30k ex-gratia
42
How are payments made on death, injury or disability treated?
Exempt from tax
43
Letting relief is the:
Lower of:
Gain in let period (exc. actual or deemed occupation)
Gain exempt under PPR relief
£40k
44
What is the date range, % deduction & any conditions for enhanced capital allowances?
Any new plant and machinery purchased between Apr21 to Mar23
Main pool - 130% FYA
SRP - 50% FYA (AIA must be used first before FYA)
45
How are net debits for NTLRs treated?
Used against CY total profits (can choose how much)
Used against PY NTLR income (all or nothing)
Group relieved (can choose how much)
Excess is carried forward against total profits (choose how much)
46
How are property losses different for companies and individuals?
Individuals - losses c/f against property income
Companies - losses c/f against total income
47
What is the end period for the indexation allowance?
December 2017
48
How does share matching work for individuals?
Same day acquisitions;
Acquisitions in the 30 days after the sale;
Share pool
49
How does share matching work for companies?
Same day acquisitions;
Previous 9 days;
Share pool
50
When does SSE (Substantial Shareholding Exemption) apply? How is the gain or loss on disposal treated?
Owned >= 10% of shares for 12 months (consistently) in the last 6 years
Disposed company must be a trading company, or holding company in the group
The gain is exempt whilst the loss is not allowable
51
How are non-UK resident companies treated in a gains group?
Non-UK resident companies do not benefit from gains group rules but can link UK companies in a gains group
52
When does a degrouping charge arise?
If:
A company leaves a gains group <= 6 years of receiving a NGNL asset transfer, AND
It still owns the asset at the date it leaves the group
53
How is the degrouping charge treated if the company leaves the group as a result of the parent selling its shares?
The DGC is added to the share sales proceeds (same if the charge is a loss)
54
When is a degrouping charge exempt?
When the sale of the shares qualifies for SSE
55
When does transfer pricing apply? How is the adjustment made?
When transactions between group or connected companies do not occur at an arm's length basis.
The company which gains a UK tax advantage must adjust its CT computation.
The other party, if a UK company, may make a corresponding adjustment.
Note - SMEs do not apply, unless they are in a territory without a DTR agreement with a non-discrimination clause
56
What qualifies for rollover relief?
Land and buildings
Ships, aircraft, hovercraft,
Fixed plant and fixed machinery
Goodwill (only individuals)
57
How is the gain that qualifies for rollover relief treated?
If re-investment is non-depreciating - deduct from base cost of replacement
If re-investment is depreciating(<= 60yrs UEL) - gain is frozen and become chargeable at the earliest of:
10 years from date of purchase
Date replacement is not longer used in trade
Disposal of replacement asset
58
What are the rules for intangible rollover relief?
Profit on disposal is deferred against the base cost of the replacement IFA
Any profit due to past amortisation (TWDV vs Cost) cannot be deferred
Amounts not re-invested in new asset are chargeable immediately
Replacement bought 12 months before - 36 months after disposal (doesn't have to be like for like)
59
How is goodwill treated from a corporation tax perspective?
| Tax, Profit, Loss & CB/CY/CF
No tax deduction for amortisation or impairment
Profit - treated as trading profit
Loss - treated as non-trading debit on IFAs
CY and carried forward against total profits as well as group relief
Cannot be carried back
60
What is the R&D super deduction for SMEs?
Normal Expenditure:
An additional 130% (230% total) deduction from trading profits for qualifying R&D revenue expenditure (staff costs, materials, utilities etc)
65% restriction for subcontractors
Capital Expenditure (not land):
100% FYA
61
How does the cash repayment on R&D super deduction for SMEs work?
| State how to qualify and what the rate of the repayment is
In order to get a repayment, the loss must be surrendered.
This is the lower of:
The trading loss
230% of the R&D expenditure
The repayment is equal to 14.5% of the surrendered loss (lower than the 19% tax rate)
Note: Helpful for cashflow
62
What are the partial exemption de-minimis tests?
Simplified Test 1:
Total input tax is no more than £625 per month on average
AND
The value of its exempt supplies is no more than 50% of the value of all of its supplies
Simplified Test 2:
Total input tax less input tax directly attributable to taxable supplies is no more than £625 per month on average
AND
The value of exempt supplies is no more than 50% of the value of all of supplies
Standard Test (applied after the split of unattributable input VAT from 1.2):
Input tax relating to exempt supplies is no more than £625 per month on average
AND
No more than 50% of total input tax
63
If the partial exemption applies, how is input VAT recovered?
Directly attributable input VAT - fully recoverable
Unattributable - Amount x (taxable supplies/total supplies)
64
What's the criteria for consortium relief?
A conco is owned by a consortium if:
≥ 75% of its share capital is owned by consortium members, each of whom own ≥ 5% and < 75%.
Consortium members must be companies, UK or overseas (only UK members can participate in the relief)
65
How does consortium relief work if ConCo has a loss (upwards)?
Maximum relief is the lower of:
Consortium members % share of ConCo's loss
Consortium members TTP
Note: the amount claimed is flexible - choose how much
66
How does consortium relief work if member has a loss (downwards)?
Maximum relief is the lower of:
Consortium members % share of ConCo's TTP
Consortium members loss
Note: the amount claimed is flexible - choose how much
67
What is the criteria (item and value) for the VAT capital goods scheme?
Land & buildings - >= £250k
Single computer items, aircraft etc - >= £50k
68
How is input VAT recovered under the capital goods scheme? (Time periods)
Land & buildings - 10 years
Other assets - 5 years
69
How is the first period, the subsequent annual adjustments and the sale of assets calculated under the capital goods scheme calculated?
First period - Input VAT x % taxable use
Subsequent adjustments - (1/N) × Input VAT × (current % taxable use - original % taxable use)
An adjustment on sale = (P/N) × Input VAT × (R – original % taxable use)
70
What is the VAT treatment for overseas imports and exports of goods?
Imports - Account for both input and output vat on the return based on VAT rating. If the trader is able to recover all the vat, it will be tax neutral
Exports - Zero rated on exports of goods
71
What is the VAT treatment for overseas supply of services?
No VAT charged by supplier, reverse VAT charge will apply.
Supply occurs in the country that is buying the service
72
What are the CLT and PET exemptions?
Annual exemption = £3000
Small gifts exemption - <=£250
Marriage exemption - £5k parent, £2.5k grandparent, £1k anyone else
Normal expenditure out of income
73
What qualifies for business property relief?
| Businesses, shares & P&M
Held for 2 years
Unincorporated trading business - 100% relief
Shares in an unquoted trading business - 100% relief
Shares in a quoted trading company if transferor has control - 50%
Land, buildings, P&M owned personally and used in a partnership, or a company controlled by individual - 50%
74
When is business property relief available on lifetime transfers?
The donee still uses the asset as a business asset at the earlier of donee or donor death
OR
The donee disposes of the asset and re-invests the proceeds in qualifying replacement property within 3 years of disposal
75
What are the exceptions to the holding period for Business Property Relief on death?
Exceptions apply when:
Property transferred replaced other business property - combined ownership of at least 2 years within 5 years prior to transfer
Property passed on death from spouse - ownership of deceased and current spouse are counted together
Successive transfers - on death AND first transfer qualified for BPR
76
What are excepted assets for business property relief purposes?
Assets not used wholly in the business in the last 2 years or are not required for the running of the business
77
A lifetime transfer qualifying for business property relief will also qualify for which capital gains tax relief?
Gift holdover relief
78
What is the criteria for Agricultural Property Relief?
UK, Channel Island, Isle of Man or EEA agricultural property
Ownership period
2 years for owner occupier OR
7 years for a landlord
100% relief to qualifying property
79
How does Agricultural Property Relief interact with Business Property Relief?
APR tax priority
BPR available on the balance leftover if it qualifies for BPR
80
How is quick succession relief (QSR) calculated?
Tax paid * (net transfer/gross transfer) * relevant %
Net transfer - transfer net of IHT
Gross transfer - transfer before any IHT
81
What are the time periods and relevant percentages for quick succession relief (QSR) ?
<= 1yrs - 100%
<= 2yrs - 80%
<= 3yrs - 60%
<= 4yrs - 40%
<= 5yrs - 20%
<= 6yrs - 0%
82
If a business is transferred as a going concern to a connected person, what election is available for plant and machinery?
Plant and machinery can be transferred at TWDV.
The transferor would have no capital allowances in the final period of account.
This avoids balancing allowances or charges.
83
What are the requirements for the structures and buildings allowance (SBA)?
Must be:
Commercial structures and buildings
Contract to build was on or after 29/10/18
First use was non-residential
84
What is the rate for the structures and buildings allowance?
3% straight line
85
What is a close company?
A UK resident company controlled by no more than 5 shareholders
86
What happens to loans made to shareholders of a close company?
The company must pay a penalty tax of 33.75% to HMRC.
The tax is repaid when the loan is repaid/written off.
87
When are loans to shareholders of a close company ignored?
If the loan is <=£15,000, full time director/employee and they own <= 5% of the shares
88
How are loans and benefits for close company shareholders assessed for income tax if they are employees or non-employees?
Employees - Employment Income
Non-employees - Dividend Income
89
How are loan write offs treated for the purposes of income tax for a close company shareholder?
Treated as dividend income (distribution)
90
What is Class 1 Employee National Insurance paid on?
Earnings (gross pay, bonuses, vouchers, excess mileage allowance)
91
What is Class 1 Employer National Insurance paid on?
Earnings
92
What is Class 1A Employer National Insurance paid on?
Benefits in kind (non-cash)
93
What does assigning as lease mean?
Sale of a lease
94
How are quoted shares valued for inheritance tax purposes?
The lower of:
Quarter-up rule - lowest SP on the day + 0.25 * (high - low)
Average marked bargains
95
What is the treatment of gifts with reservation of benefit?
Tax gift as PET/CLT at the MV at the date of the gift
AND EITHER
- If reservation applies at death, tax at MV at death
OR
If reservation removed within the 7 years before death, tax PET using MV at the date of removal
Tax relief applies where the only charge will be the scenario with the highest IHT liability payable
96
Who is a qualifying individual for Enterprise Investment Scheme (EIS)?
Not connected to the company:
Holds <= 30% of the shares
Not an employee
97
What are the income tax reliefs for Enterprise Investment Scheme (EIS)?
| Think about the clawbacks as well
30% income tax credit on amounts invested <= £1m - CY or PY
If shares sold <3 years after investment, credit clawback - Proceeds * original rate of relief
98
What are the capital gains tax reliefs for Enterprise Investment Scheme (EIS)?
| Think about the losses as well
Any gain on share sale is exempt (if held for >= 3 years)
Losses can be used on gains or income of the CY or PY (in CGT loss calculation, the cost is reduced by IT credit claimed)
99
How does re-investment relief work for Enterprise Investment Scheme (EIS)?
Gains arising on assets can be deferred if proceeds reinvested in EIS shares between 12m before – 36m after disposal date.
The gain deferred is the lowest of:
The gain
The investment in EIS shares
Any lower amount chosen
The gain will become chargeable when the shares are sold.
100
Who is a qualifying individual for SEIS?
Not connected to the company:
Holds <= 30% of the shares
Not an employee
101
What are the income tax reliefs for SEIS?
50% income tax credit on amounts invested <= £100k - CY or PY
If shares sold <3 years after investment, credit clawback.
Lower of
Proceeds * original rate of relief
Relief originally claimed
102
What are the capital gains tax reliefs for SEIS?
Any gain on share sale is exempt (if held for >= 3 years)
Losses can be used on gains or income of the CY or PY (cost reduced by IT credit claimed)
103
How does re-investment relief work for SEIS?
Where an individual makes a gain on the disposal of an asset, the gain can be deferred if they also make a qualifying SEIS investment during that same tax year.
The gain deferred is the lowest of:
50% of the gain
50% of the investment
Any lower amount chosen
If the shares are sold within 3 years, the exemption withdrawn = Previously exempted gain × (income tax withdrawal/income tax relief claimed)
104
Who is a qualifying investee for VCTs?
Individuals:
<= 30% shareholder
Not connected to the company
Not an employee
Unquoted trading companies
105
What are the income tax reliefs for VCTs?
30% income tax credit on amounts invested (<=£0.2m)
If shares sold <5, income tax credit clawback -> rate of relief (30%) * proceeds
Dividends received are tax-free
106
What are the capital gains tax reliefs for VCTs?
Any gain on share sale is exempt
No allowable losses
107
What is the tax impact upon exercise for both a tax advantaged & non-tax advantaged scheme?
Tax advantaged - no impact
Non-tax advantaged - Employee suffers income tax (and class 1 NICs if the company is quoted).
108
State when a restriction on company group loss relief applies and what the restrictions are
Restrictions apply when there is:
A change in ownership
AND
A major change in the nature or conduct of the trader of a company within a 5 year period of the change in ownership.
Restrictions
Losses before change cannot be used against profits after change
Losses after change cannot be used against profits before change
109
How are non-UK companies treated for the purposes of group loss relief?
They cannot participate in loss relief but can provide a link to other UK companies.
110
How are carried forward losses for companies treated?
Against total profits
111
How are pre-entry gains and losses treated in gains groups?
Pre-entry losses - cannot be used on post entry gains
Pre-entry gains - cannot be used against post entry losses
112
How is VAT on property treated?
New residential property - zero rated
New (<3 years old) commercial buildings - standard rated
Other transactions - exempt unless there has been an option to tax
113
How is the option to tax property treated?
If VAT registered, exempt property can be taxed but this will apply to all future supplies of building and land
114
What is stamp duty land tax charged on and what are the bands?
Charged on land transactions, VAT inclusive.
0% - 0 - 150k
2% - 150k - 250k
5% - 250k and above
115
How is stamp duty and stamp duty land tax treated for 75% intra group transfers?
It is exempt
For land tax, if recipient leaves group within 3 years, relief is withdrawn
116
What is the tax allowable amortisation on IFAs if no amortisation is put through the accounts?
4% straight line p.a
117
When a subsidiary is due to be disposed, when does group relief stop?
At the point when arrangements are in place for the company to leave the group
118
What are group relief losses set against?
TTP - Taxable total profits
119
How much group loss can be surrendered?
Lower of:
Loss
TTP for the period (after deduction of group company's own losses against profits)
120
When do companies have to pay corporation tax in instalments?
When augmented profits (TTP + dividend income from not related 51% group companies) are > £1.5m
121
How are corporation tax thresholds set for companies in groups?
No of companies in a group share the £1.5m in a pool.
Time apportioned for short accounting periods.
122
Who qualifies for the remittance basis?
Individuals who are UK resident but not domiciled
123
What happens to individuals who opt for the remittance basis?
Lose entitlement to UK personal allowances and CGT AEA
Pay a charge of either
£30k if resident for 7 out of the last 9 years
£60k if resident for 12 out of the last 14 years
124
Who automatically qualifies for the remittance basis?
The remittance basis applies automatically if unremitted o/s income and gains are < £2,000.
If so, the individual doesn’t lose their tax-free amounts and doesn’t pay the RBC
125
How would a non-UK domiciled individual born overseas be deemed UK domiciled?
Resident in the UK for 15 of the 20 years preceding the relevant tax year, UNLESS
There is no tax year beginning after 5.4.17 in which they were UK resident
126
What are the UK residency ties?
| There are 5 of them
UK Family - UK resident close family
UK Accomodation - UK accomodation available >= 91 days (occupied for >= 1 night in tax year)
UK work - Substantive UK work
90 days in UK - Spends 90 days in the UK in either of the previous 2 tax years
Other Country - In the UK for more days than any other country this tax year
127
How is the non-job related accommodation benefit calculated?
If the employer owns the property
Annual value + ((Cost - 75k) * 0.02) - employee contributions
If the employer rents
Higher of annual value or rent less employee contributions
128
When is an individual a temporary non-resident for overseas CGT purposes?
Were resident in 4 of the last 7 years prior to the tax year of departure.
Non UK resident for <= 5 years from the date of departure
129
How are UK and overseas income treated based on residency and domicile status?
UK income always taxable on an arising basis
Overseas income
Resident & domiciled - Arising basis
Resident, not domiciled - possible remittance
Not resident or domiciled - Not taxable
130
How are UK and overseas gains treated based on residency and domicile status?
UK gains
Resident & domiciled - Arising basis
Resident, not domiciled - Arising basis
Not resident or domiciled - Usually not taxable (property & temporary non-resident)
Overseas income
Resident & domiciled - Arising basis
Resident, not domiciled - possible remittance
Not resident or domiciled - Not taxable
131
What is the criteria for the capital treatment on share buy-backs?
Automatic if corporate (company) shareholder
OR
Unquoted trading co
Repurchase is for the benefit of trade
Shareholder resident in the UK
Shares held for >= 5 years (3 if inherited)
Shareholder's holding reduced by >= 25%
Shareholder left with <= 30% of company holding
Treat shares as though they have been cancelled
132
How is the CGT on the capital treatment on share buy-backs calculated?
Normal - proceeds less cost
133
What is the criteria for the dividend (distribution) treatment on share buy-backs?
Automatic if capital treatment doesn't apply
134
What are the tax calculations for the dividend treatment on share buy-backs?
Income Tax
Net dividend = Proceeds less original subscription price
CGT
Allowable loss = Original subscription price less cost of shares
135
What are the conditions for forming a VAT group?
What is the impact on companies within the VAT group?
Condition
UK or PE companies under common control can form a VAT group
Impact
No VAT charges within the group
Singular VAT return
136
When is the transfer/sale of a business as a going concern outside the scope of VAT?
If the business is sold to a registered trader, with no change in trade and no significant break
Except for commercial buildings which option to tax has been exercised
137
How is input VAT treated for cars, UK customer entertainment and o/seas customer entertainment?
Car and UK customers - Irrecoverable
O/seas customers - Recoverable
138
What are the entry and exit thresholds for the VAT cash and annual accounting schemes?
Entry - taxable turnover <= £1.35m
Exit - taxable turnover >£1.6m
139
What are the entry and exit thresholds for the VAT flat rate scheme?
Entry - taxable turnover <=£150k
Exit - taxable turnover > £230k
140
What are some exempt employee benefits?
Employer pension contributions
First £8,000 of removal/relocating costs
Social events paid for by employer <= £150, excess of £150 is taxable
One mobile phone
Trivial benefit <£50
£500 medical treatment to help return to work
Loans <£10,000 (if over £10k, interest fully taxable on whole amount)
141
How is income from discretionary and interest in possession trusts received?
Discretionary - gross income up by 100/55, non-savings income
Interest in possession - gross income up by (20% non-savings income) 100/80 or (8.75% dividend income) 100/92.25
142
When is a company deemed to have commenced winding up?
Earlier of:
Members passing a resolution
Appointment of a liquidator
143
How are distributions treated in a liquidation scenario?
Factor in impact on corporate or individual shareholders
Pre-winding up - Dividend treatment
Corporate shareholder - receive dividends (no corp tax)
Individual shareholder - receive dividends (normal dividend tax)
Post-winding up - Capital treatment
Corporate shareholder - gain (proceeds - cost) SSE can apply
Individual shareholder - gain (proceeds - cost) BADR can apply
144
When must HMRC be notified for VAT purposes when trade ceases?
30 days of ceasing to make taxable supplies
145
How are the consideration elements of a takeover treated when it is for business purposes?
Cash - Immediate gain (defer against cost if cash <= 5% of consideration)
Shares - no gain until they are sold
QCBs - no gain until they are sold/redeemed
146
What's the maximum duration for short life assets?
8 years
147
Which assets can't be de-pooled as a short life asset?
Cars, assets with any non-business use and assets in the special rate pool
148
How are leavers and arrivers assessed for the split year basis to apply?
They must be resident in the UK for the current tax year AND
Leavers - UK resident in prior tax year, non-UK resident following tax year
Arriver - Non-UK resident in prior tax year
149
How is the income of a jointly held asset split between married couples/civil partners?
Split 50/50 regardless of the interest in the asset.
They would have to elect to split the income in a different way
150
What is the restriction on transfers to non-domiciled spouses for IHT purposes?
They are limited to £325,000 on lifetime transfers and the death estate.
151
How do PETs interact with the nil rate band on lifetime transfers and death?
Lifetime transfers - not used but will use up annual exemptions
Death - used
152
What is a CFC?
It is a non-UK resident company controlled by UK companies and/or individuals.
153
What is a CFC charge?
A corporation tax charge on CFC owners if profits have been artificially diverted from the UK
154
When does a CFC charge arise?
When it has **chargeable profits**
AND
Not covered by the exemptions
155
When is there no chargeable profit for CFCs?
When the CFC:
Holds no assets or risks intended to reduce UK Tax
Hold no assets or risks managed in the UK
Can continue business without UK management of assets or risks
156
What exemptions prevent a CFC charge?
Exempt period exemption - Not liable to CFC charge 12 months after it has been acquired
Tax exemption - Local tax at least 75% of UK tax
Excluded territories exemption - CFC is resident in excluded territory and meets UK tax requirements
Profits exemption - <= £500k profits and <= 50k non-trading income
Profit margin - <= 10% profit/expenditure
157
When must individuals income tax returns be filed?
Later of:
Paper returns - 31st October after tax year end
Online return - 31st January after tax year end
OR
3 months after return issued for both paper and online
158
When must individuals income, class 2 & 4 NI & CGT tax be paid?
31st January after tax year end
159
What are the due dates for payments on account? (POA)
3 payments:
31st Jan - in-year
31st July - in-year
31st Jan - post-year
160
When must companies income tax returns be filed?
Later of:
12 months after the end of the CAP
3 months after return issued
161
When must corporation tax be paid?
| Normal and augmented
Normal:
9 months and a day after end of CAP
Augmented basis:
Paid on the 14th day of the following months:
7, 10 (in period) and 1,4 (post-period)
