Comprehensive Computation of Taxable Income and Tax Liability Flashcards
Interest payments made on loans is deducted from……
trading income and property business income
4 qualifying loans
Loan to purchase plant and machinery which is necessarily acquired for the use in the employment of the taxpayer
Loan to purchase plant and machinery for the use in the business of a partnership, in which the taxpayer is a partner.
Loan to purchase an interest in a partnership.
Loan to purchase ordinary shares in a close company
Benefits of Gift Aid Donations for individuals
- Pay net 20% - HMRC pays remaining balance on your behalf
- Basis rate and Higher rate bands are extended by the Gross Gift Aid
- The Adjusted Net Income is reduced by the gross gift aid
Gift aid donations for companies
Deducted from profits
Net Income in computing tax liability
Total Income - Qualifying Loan Interest - Trading Loss Relief
Adjusted Net Income in determining the Personal Allowance
Net Income - Gross gift aid contributions - Gross Personal Pension Contributions
Personal Allowance reduces by …
1/2 of excess of Adjusted Net Income over $100,000
Transferable Personal Allowance
One individual must be a non-taxpayer and have unused P.A.
The other individual must be a basic rate tax payer.
Maximum transfer $1,260
Receiving gets a tax credit of 252
Considerations when declaring to split income between a couple (Not equally)
Ensure that the personal allowance is fully used up
Give more income to lower tax payer
How is joint property income shared for savings accounts
50:50
How is joint property income shared for property
50:50 if no declaration
Who pays tax: Minor or Parent
Parent when:
Source of Capital
Earning is more than £100 per annum
Child is under 18 years of age
