Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ACCA F6: Taxation > F6 Tax > Flashcards

F6 Tax Flashcards

1
Q

What are the three criteria of the Automatic Overseas Test?

A
  1. Present in UK for less than 16 days in tax year
  2. Present in UK for less than 46 days and not resident during 3 previous tax years.
  3. Work overseas full-time and are not present in UK for more than 90 days at a time.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the three criteria of the Automatic UK test?

A
  1. Present in UK for 183 days or more in tax year
  2. Only home is in the UK
  3. Carry out full time work in UK.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the 5 Sufficient Ties?

A
  1. Close family in UK
  2. Accommodation in UK available for at least one night in tax year
  3. Working in UK for at least 40 days at 3 hours per day.
  4. Being present in UK for more than 90 days of either of previous 2 tax years.
  5. Spending more time in UK than any other country if resident in last 3 tax years.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

In which order do we tax income?

A

Non-Savings Income,
Savings Income,
Dividend Income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the proforma for income tax?

A

Trading Income X
Less Loss Relief (X)

Employment Income           X
Property Income                 X
Building Soc/Bank Interest X
Other Interest                      X
Property Income                 X
Total Income                        X

Less Qualifying Interest (X)
Less Loss Relief (X)
Net Income X

Less Personal Allowance (X)
Taxable Income X

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Name 7 Tax Free (Exempt) Incomes

A
  1. NS&I Certificates
  2. Statutory Redundancy Money
  3. Winnings
  4. Scholarships
  5. Interest on Personal Injury Damages
  6. Income from ISAs
  7. Local Authority Grants
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What type of loans give rise to qualifying interest?

A
  1. Plant & Machinery for use in Partnership or Employment
  2. Invest in partnership
  3. Buy interest in employee controlled company
  4. Invest in a cooperative.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the factors that would lead to a presumption of employment versus. self employment?

A
  1. Client provides equipment necessary for the work
  2. If directed on where they work, hours they work and method of working.
  3. If they cannot decline work.
  4. If they hold an integral position in the company.
  5. If they bear no risk i.e. financial or personal risk in respect of the duties they perform.
  6. If they have rights under legislation, Class 1 NIC or receive regular remuneration, holiday pay, redundancy pay or benefits,
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

When is a deduction allowable?

A

When the expense is incurred wholly, exclusively and necessarily in the performance of duties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

List the 5 main allowable deductions.

A
  1. Contributions by individual to Occupational Pension Scheme.
  2. Professional body fees and subscriptions.
  3. Travelling expenses for the performance of duties.
  4. Capital allowances on plant and machinery necessarily provided by the employee.
  5. Donations to charity under the payroll giving scheme.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the proforma for employment income?

A

Salary
Bonus
Commission/Tips
Benefits

Less allowable deductions
Employment Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How are accommodation living expenses benefits calculated?

A

Job Related:

  • Cost to employer
  • Cannot exceed 10% of net earnings

Non-Job Related:
- Cost to Employer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How is the taxable benefit calculated on the use of employer assets?

A

Higher of:

  1. 20% of the value when first made available to the employee.
  2. Rental paid by the employer.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How is the taxable benefit calculated on giving the asset to the employee after use?

A

Higher of:

  1. Market Value when given
  2. Market value when first used less amounts taxed as taxable benefits up to date of gift.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the proforma for cheap/interest free loans?

A

(Average Loan x 2.5%) - Interest Paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Name the main taxable benefits?

A 
Accommodation
Accommodation Living Expenses
Employer Assets
Company Cars, Vans & Fuel
Cheap/Interest Free Loans
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

List benefits exempt from tax.

A
  1. Free/Subsidised Canteen Meals

2.

18
Q

What are the maximum tax relievable pension contributions?

A

Higher of:

  1. £3,600
  2. Relevant earnings.
19
Q

What is the annual allowance for pensions?

A

Minimum £10,000

Maximum £40,000

20
Q

What is the formula for tapering the pension annual allowance?

A

0.5 * (Income - 150,000)

where income is less than 210,000

21
Q

What is the proforma for property income?

A 
Rental Income                    X
Less Expenses                  (X)
 - Advertising
 - Agent Fees
- Repairs

Property Income X

22
Q

When do we tax property profits and property losses?

A

Profits: Taxed in current year
Losses: Carried forward

23
Q

When is relief given for property?

A
  1. No relief on capital items such as fixtures, boilers, radiators etc.
  2. Relief on replacement of furniture but not on when first provided.
24
Q

How is replacement furniture relief calculated?

A

Expenditure on replacement asset
Less proceeds from old asset
Plus costs of disposal

25
Q

What criteria constitute accommodation as a FHL?

A
  1. Available for letting more than 210 days
  2. Actually let for at least 105 days
  3. Normal tenancy at max 31 days but can be extended no longer than 155 days.
  4. Is in the EEA.
26
Q

What are the advantages of having an FHL?

A
  1. Finance costs are not restricted.
  2. Capital allowances are available on furniture.
  3. Income treated as earned income so qualifies as relevant earnings for pension contributions.
  4. Capital gains tax rollover relief, entrepreneurs relief and gift relief available on any subsequent sale of the property.
27
Q

What is the formula for lease premiums of a short lease?

A

Premium X
Less 2% * (n-1) * Premium (X)

where n is length of the lease.

28
Q

What are the 6 Badges of Trade?

A
  1. Subject Matter
    - nature of which is analysed to work out if a person is trading or not
  2. Frequency of Transactions
    - Capital transactions will indicate trade with increased frequency.
  3. Length of Ownership
    - trade may be inferred where purchased items are sold again very soon afterwards.
  4. Profit Motive
    - Profit motive indicates trading.
  5. Supplementary work and marketing
    - where steps are made to find purchasers or marketing is done indicates trade.
  6. Manner in which assets are acquired
    - i.e. inherited items will not indicate trade.
29
Q

What is the proforma for tax-adjusted trading profits?

A

Net Profit
Add back:
- expenditure not deductible for tax
- any non-trading expenditure

Deduct:
Items not taxed as trading income
- income assessable under other categories
- non taxable income

Adjusted Profits
Less Capital Allowances on P&M
Trading Income

30
Q

List examples of expenditure not deductible for tax.

A
  1. Capital expenditure
    - dep’n, fees for capital acq’n/disposal (lease renewal fees on land and buildings are deductible)
  2. Qualifying Interest
  3. Adjustment to general provisions/allowances
  4. Third party entertaining
  5. Gifts to customers unless:
    - cost < £50 p.a per receipient
    - bears a company logo
    - not food, drink, tobacco or vouchers
  6. Private expenditure/appropriations of trade profit
  7. Charitable & political donations
    - small local charity donations exempt.
  8. legal/professional expenses
  9. leased cars > 130g/km give 15% of lease costs disallowed.
31
Q

What are the rules on WDA, FYA, and AIA in the year of cessation?

A

They cannot be claimed.

32
Q

What are the three cessation year rules?

A
  1. Additions in relevant period are brought in
  2. Disposal proceeds are deducted from the balance of qualifying expenditure.
  3. If proceeds > TWDV at disposal = balancing charge.
    Vice versa for balancing allowance.
33
Q

What is the opening year rule for taxing the first year of trade?

A

Tax date of commencement to next tax year end.

34
Q

What are the two questions to be asked when looking at the second year opening rules?

A
  1. Is there an accounting period ending in the tax year?

2. If yes how long is it

35
Q

What is the process if the second year trading is equal to 12 months?

A

Tax on a CYB

36
Q

What is the process if the second year trading is less than 12 months?

A

Tax profits of first 12 months of trade

37
Q

What is the process if the second year trading is more than 12 months?

A

Tax profits of 12 months to accounting date.

38
Q

What is the process for taxing the third year of trading?

A

Tax on a CYB.

39
Q

When are overlap profits relieved?

A

On cessation of trade.

40
Q

What are the closing year rules?

A

Tax penultimate tax year on CYB.

Final tax year: Tax what is left less overlap profits

ACCA F6: Taxation (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions