C6-9 Flashcards
what is capital allowances and how are they calculated
It is dep for tax and is deducted from tax adj trading profit (TTP)
TTP= adjust profits - capital allowances. They are only avl on plant and machinery
What is included in P&M
P= fixtures/fittings, furniture and equipment
M= machines, MV and computers
What are the two categories of P&M
private use pool- capital allowance is calculated on business use portion
general/main pool- all other assets inc cars with CO2 emissions less than 50g/km and purchased on or after 6th April 2021. Balance at end is TWDV (carrying amount)
What are the 3 types of capital allowance
WDA- written down allowance
FYA- first year allowance
AIA- annual investment allowance
Formula for WDA
TWDV x 18%
Given on balance of main pool
Formula for AIA
100% relief on qualifying assets with a max o f £1m
used against any assets besides cars
Formula for FYA
100% relief on certain assets within first year of purchase
these include 0 emission cars and charging points
YOU DO NOT TIME APPORTION THIS
How do you treat Private use assets (inc when sold)
You only account for business portion
When sold: use lower of proceeds and cost
How do you get taxable profit
1) Adjust profit
2) deduct capital allowance
This gives tax adjusted profit
3) share between partners using the agreement
B) allocate salary interest on capital and remaining profit using PSR
4) Tax accordingly
What is class 2 and class 4 NIC? What are relevant dates?
Class 2= £3.45 per week traders must register by 31 Jan (£179 PA)
Class 4= paid on tax adjusted trading profit. Traders must register by October 5
What are POA, when are they due?
POA are payments on account for self employed and are advances towards tax liability. They are due on 31 Jan, then 31 Jul.
it is calculated as half of last years bill
How do you calc POA and in a proforma sense
it is half of last years bill
Tax liability- (less) class 4 NIC- time apportion (divide by 2)
What is class 1 NIC, who are primary and secondary payers and when is the due date? How much allowance do businesses get
It is NIC paid on salaries (not profit). primary is paid by employees and secondary is paid by employer. it is due on the 19th but extended for electronic payments. Businesses get max 5k (not per person)
Define CGT and what is the annual exempt amount?
It is charged on gains from chargeable disposals of chargeable assets by chargeable person
£6000
What assets are not chargeable (exempt)
Cash, Cars, ISAs, qualifying bonds, NSC and prizes
