Important allow/disallow etc Flashcards
Exempt/taxable income
Interest on national saving certificates
exempt
Exempt/taxable income
Income from ISA
Exempt
Exempt/taxable income
betting, lottery and premium bond winnings
exempt
Exempt/taxable income
Some social security benefits (housing/child)
exempt
Exempt/taxable income
First 7,500 gross annual rent under rent a room
exempt
Exempt/taxable income
scholarships
exempt
Exempt/taxable income
Income tax repayment interest
exempt
Exempt/taxable income
Universal credit
exempt
Exempt/taxable income
Apprenticeship bursaries paid to care leavers
exempt
Exempt/taxable income
Payments under compensation schemes
Exempt
Rental - allowable expenses
Legal professional and admin costs
allow
Rental - allowable expenses
Interest paid relating to non-residential property (loan to buy)
Allow
Rental - allowable expenses
Rates and taxes paid by landlord
allow
Rental - allowable expenses
ancillary services provided by landlord (cleaning gardening)
allow
Rental - allowable expenses
insurance for property
allow
Rental - allowable expenses
repairs and maintenance
Allow
Rental - allowable expenses
fixed rate deduction for motor vehicles
allow
Relief for finance costs is given as a
tax reducer and is 20% of the lower of
- finance cost for year + bf
- property income for tax year (after b/f losses)
- adjusted total income that exceeds PA
Rental - allowable expenses
purchase of original item
Not allowed - capital
employees - allowable travel expenses
not ordinary commuting incurred necessarily for performance of duties of the office or employment
allowable
employees - allowable travel expenses
home to work for site based employees
allowable
employees - allowable travel expenses
Home to work where tax payers home is work location
allowable
employees - allowable travel expenses
where employee works at temporary workplace for less than 24 months
Allowable
employees - taxable / exempt benefit
vouchers
taxable - cost to employer less anything paid by employee
employees - taxable / exempt benefit
living accommodation - job releated
exempt
employees - taxable / exempt benefit
living accommodation - not job related
taxable on basi rental benefit and additional yearly rent for anything over 75k
Cost is original value unless provided more than 6 years after purchase then MV when provided to employee
employees - taxable / exempt benefit
Expenses connected with provision of living accomodation
taxable on cost to employee
Living accommodation - not job related - additional yearly rent calculation
2% * excess over 75k
employees - taxable / exempt benefit
Vans for private use
taxable - 3600 flat rate less employee contributions
employees - taxable / exempt benefit
zero emissions vans for private use
0
employees - taxable / exempt benefit
private fuel for VANS
TAXABLE 688
employees - taxable / exempt benefit
provision of furniture to living accomodation
20% MV when first provided for employee use
employees - taxable / exempt benefit
additional expenses where job related accommodation limited to
10% employees net. yearnings
employees - taxable / exempt benefit
employment related loans total < £10,000
exempt
employees - taxable / exempt benefit
asset transferred to employee (often after private use)
taxable
benefit is greater of
current market value
mv when first provided - amounts already taxed
employees - taxable value of benefits through salary sacrifice
higher of taxable value and value of cash sacrificed
employees - taxable / exempt benefit
pension savings
exempt
employees - taxable / exempt benefit
employer provided pension advice up to £500 per year
Exempt
employees - taxable / exempt benefit
Trivial benefit < £50 not cash or cash voucher and provided for non-work reason
Exempt - annual cap £300 in respect of certain directors
employees - taxable / exempt benefit
Counselling and outplacement services and retraining courses on termination of employment
exempt
employees - taxable / exempt benefit
childcare facilities run by or on behalf of the employer
exempt
employees - taxable / exempt benefit
one mobile phone available for private use
exempt
employees - taxable / exempt benefit
free or subsidised meals in a canteen where available to all staff
exempt - however not where through salary sacrifice
employees - taxable / exempt benefit
total loans not exceeding £10,000 per tax year
exempt
employees - taxable / exempt benefit
Social event paid for up to £150 per head per tax year
exempt
employees - taxable / exempt benefit
entertainment provided by third parties
exempt
employees - taxable / exempt benefit
non cash gift from third party up to £250 per tax year from same donor
exempt
employees - taxable / exempt benefit
parking space at or near work
exempt
employees - taxable / exempt benefit
awards up to £5,000 for staff suggestion scheme
exempt
employees - taxable / exempt benefit
work related training
exempt
employees - taxable / exempt benefit
work related training
exempt
employees - taxable / exempt benefit
sports and recreation facilities available to employees but not to general public
exempt
employees - taxable / exempt benefit
payments to additional cost of working from home
exempt - 6£ no evidence
employees - taxable / exempt benefit
personal incidental expenses whilst away on business
exempt
£5 per night UK
£10 per night abroad
employees - taxable / exempt benefit
overseas medical treatment whilst working abroad
exempt
employees - taxable / exempt benefit
payment of travel expenses where public transport id disrupted, late night journeys and where car share arrangements break down
exempt
employees - taxable / exempt benefit
use of bicycles of cyclist safety equipment if available to all employees
exempt
employees - taxable / exempt benefit
works buses and subsidies to public bus services
exempt
employees - taxable / exempt benefit
provision of vehicle battery charging at or near workplace for employee who uses vehicle (even as passenger)
exempt - if made available generally to employees at that workpalce
employees - taxable / exempt benefit
Reasonable removal expenses paid for by an employer for new employment position or relocation
exempt up to maximum £8,000
employees - taxable / exempt benefit
non cash long service awards in respect of at least 20 years of service not exceeding £50 per year
exempt
employees - taxable / exempt benefit
eye tests and prescription glasses for employees using VDU
exempt
employees - taxable / exempt benefit
health screening assessment or medical check up provided for an employee by employer (1 per tax year)
exempt
employees - taxable / exempt benefit
cost of officially recommended medical treatment to help employee return to work after period of absence due to ill health or injruy
exempt up to £500
capital gains - chargeable / exempt person
individuals
chargeable
capital gains - chargeable / exempt persons
business partners
chargeable
capital gains - chargeable / exempt persons
trustees
chargeable
capital gains - chargeable / exempt persons
companies
chargeable
capital gains - chargeable / exempt persons
registered charities using gains for charitable purposes
exempt
capital gains - chargeable / exempt persons
friendly socieites
exmept
capital gains - chargeable / exempt persons
localauthorities
exempt
capital gains - chargeable / exempt persons
registered pension schemes
exempt
capital gains - chargeable / exempt persons
investment trusts
exempt
capital gains - chargeable / exempt persons
approved scientific research associations
exempt
Chargeable disposals include
Sale
gift
receipts of capital sums on surrender of rights of assets
loss/destruction
appropriation of assets as trading stock
CGT - Exempt assets/chargeable
legal tender (cash)
exempt
CGT - Exempt assets/chargeable
motor cars
exempt
CGT - Exempt assets/chargeable
medals awarded for valour if the person disposing of the medal did not acquire it for money
exempt
CGT - Exempt assets/chargeable
wasting chattels
exempt - except assets used in a business where owner has/could have claimed CA
CGT - Exempt assets/chargeable
Chattels which are not wasting o used in business sold at gain for consideration <6,000
exempt
CGT - Exempt assets/chargeable
gilt edged securities
exempt
CGT - Exempt assets/chargeable
QCBs
exempt
CGT - Exempt assets/chargeable
National savings certificates & premium bonds
exempt
CGT - Exempt assets/chargeable
shares and investments in an ISA
exempt
Sole traders allow/disallow
Generally
disallow
Sole traders allow/disallow
Gifts to employees
allowable
Sole traders allow/disallow
gifts of trade samples
allowable
Sole traders allow/disallow
gift to customer
allowable if have advertisement, not food drink tobacco or cigs and < £50
Sole traders allow/disallow
donations and subscriptions - general
disallow
Sole traders allow/disallow
small donations to local charities
allow
Sole traders allow/disallow
Trading stock/plant gifted to charities/UK educational establishments
Allo
Sole traders allow/disallow
Subscription to trade and professional associations
Allow
Sole traders allow/disallow
fines and penalties
disallowable apart from employee parking fines on business
Sole traders allow/disallow
interest on late payment of tax
disallowable
Sole traders allow/disallow
legal and professional fees relating to capital
disallow
Sole traders allow/disallow
legal costs of renewing short lease < 50 years
allos
Sole traders allow/disallow
Legal cost of registration of patent/copyright for trade use
allow
Sole traders allow/disallow
legal costs related to incidental cost of raising LT finance
allow
Sole traders allow/disallow
irrecoverable VAT related to disallowable expenditure
disallow
Sole traders allow/disallow
cessation of trade payments in addition to redundancy allowable up to
3 * statutory redundancy pay
Sole traders allow/disallow
lease cars > 50g/km
15% * hire charge
Sole traders allow/disallow
Lease cars < 50g/km
charge allowable
Sole traders allow/disallow
goods taken with nothing recorded
add back selling rpice
Sole traders allow/disallow
goods taken with cost recorded
add back profit
Max employee contribution deduction for gift of company car
5000
Under the cash basis, payments for capital assets are
deductible in calculating TTP and capital allowances are not available
Cash basis, what items do the same rules as accruals basis apply
cars - capital allowances
non-depreciating assets (buildings and land) - disallowed
When trader ceases to use capital asset for the purposes of trade, under the cash basis the market value of the asset at that date
is treated as a taxable receipt
When a trader ceases to trade, under the cash basis, the value of stock and work in progress is treated as
a taxable receipt in the final POA
If working abroad, how many family flights are exempt from tax
2 return trips
If working abroad, how many individuals flights re exempt from tax
all
if working abroad, is accommodation taxable?
No
Gift relief applies to
Shares in unquoted trading company
Assets in personal (5%) company
Personal quoted company shares
BADR on assets
All the business assets
Trade used assets
Two years of ownership
BADR shares
Five % of shares
Trading company
Two years of ownership
Worker
Investors relief
Subscribe to new shares
Trading company
Unquoted/Unlisted
Not a worker of
Issued after March 2016
Three years held
Using loopholes in tax legislation is
tax avoidance
Tax avoidance is
operating within the letter but not in spirit of the law and bending rules of the system to gain an advantage parliament did not intend. May be struck down
Complex/artificial tax avoidance schemes may be
struck down in the courts, the more complex or artificial more likely to be struck down
Tax evasion
Tax evasion involves deliberate intention to mislead HMRC by either suppressing or falsifying information
When is VAT due
due date for VAT return and payment is 1 month 7 days after the quarterly return
Conflict of interest threatens
confidentiality and objectivity
Procedures before accepting client
carry out customer DD to establish areas of risk
Verify identify of client and directors and keep evidence of identification
obtain professional clearance from previous advisors
prepare appropriate engagement letter explaining scope of responsibilities
How does reverse charge system work
account for output tax on VAT return as treated as making supply. Same amount recovered as input tax on same VAT return if company makes only taxable supplies
Companies
Donations to political parties are
Not allowable
Sole trader
Expenses incurred prior to trade can be deducted if
they were incurred within the 7 years prior to starting business and still own the asset/have benefit of the service
VAT
VAT on assets can be recovered if
they were purchased within 4 years of starting trade and are still owned
VAT on services can be recovered if
they were incurred in the 6 months before starting trade
GDPR
data breaches must be notified within
72 hours
GDPR
fines for breaches are subject to maximum of
higher of 4% global turnover or 20millioin euros
Who monitors compliance with GDPR
ICO (Information Commissioners Officer)
GDPR
Firms must appoint
DPO
GDPR
firms handling personal data must
notify the CIO so they can be added to a register of data controllers - failure to notify is an offence
when can accountants override confidentiality and disclose information
if authorised by client/employer
if required by law (legal proceedings/ML)
if there is a professional duty (quality review, inquiry by professional body)
Is tax evasion money laundering?
Yes and it is criminal
Adjusted net income =
net income - gross gift aid donations - gross personal pension contributions
what assets can be given to charity
mv shares, securities, those listed on recognised exchanges, land and buildings - not cash
Assets jointly owned are split 50:50 unless election made - what is the exception
dividends from shares in family companies - taxed on actual ownership
Property income
relief for finance costs is the lower of
Finance cost + FC b/f
Property income - losses
Adjusted total income (NSI after losses, reliefs)
Employment income
Cash yearnings are received on
the earlier of the time the payment is made and when they become entitled to it
Sole trader - expenditure incurred prior to trade
Insurance
insurance is allowable for the period from being taken out
Sole traders get FYA on
0% emission cars
Sole trader
allow/disallow
legal cost on renewing short term lease (<50years)
Allow
Sole trader
allow disallow
cost of registering for patent
allow
Sole trader
allow disallow
copyright for trade use
allow
Sole trader
allow disallow
incidental cost of raising LT finance
allow
effective rate of tax
average total tax per 1£ income
= IT+NIC / Total income
Marginal rate of tax
tax on extra £1 of income
BPR
Unincorporated business
100%
BPR
Shares in quoted trading company
100%
BPR
Shares in quoted trading company where donor had control
50%
BPR
L&B / P&M owned by an individual and used in partnership/company they control
50%
Requirements for BPR
2 year ownership, unless replacement property or transfers between spouse
When no BPR?
if business mainly deals in stocks and shares, land and buildings, making or holding investments or if there is a contract for sale in place
Which pool
Computers, equipment, shelving, vans and lorries
main pool
Which pool
moveable office partitioning
main pool
Which pool
alterations to buildings incidental to installation of P&M
main pool
Which pool
tables and chairs
main pool
Which pool
fire regulation expenditure
main pool
Which pool
integral features (electrical, thermal, cooling)
special rate pool
Which pool
long life assets
special rate pool
Long life assets
assets when new with an expected economic working life of 25 years or more when total expenditure based on 12 months accounting period > 100,000
what is the maximum limit if using loss against other income
greater of
50,000
25% total income
Loss made in first ?? years of trade applies for what kind of relief
opening year relief
How does opening years relief work
can relieve against Toal income for previous 3 tax years on FIFO basis
Restriction on corporation tax carried forward is restricted to
£5million§ per 12m
+ 50% of profit above this
de-grouping charge definition
gain which would have arisen if assets transferred in the six years immediately prior to the disposal of the departing group member had been taxable transfers rather than transfers at nil gain/nil loss
degrouping charge will arise if when the departing company leaves either
still owns the asset;
owns a replacement asset against which the gain on the first asset has been rolled over
How is a degrouping gain treated
added to the sales proceeds received on disposal of shares
How is a degrouping loss treated
added to allowable cost on the disposal of the shares
Conflict of interest threatens
objectivity
ICAEW tax code where conflict
client in competition with the firm
financial involvement with a client
VAT - restaurants supply
services - not goods
single supply, food is incidental to main services of cooking, serving, washing up and ambience
