Income Tax Flashcards
When does tax year run?
6th April to 5th April
When must tax returns be submitted?
Electronic - 31 Jan after tax year
Paper - 31 October after tax year (3 months earlier)
When must self assessor pay tax?
2 payments on account
1 - 31 Jan in tax year
2 - 31 July after end of tax year
Balancing payment due 31 Jan after end of tax year
Each payment on account = 50% of previous years liability
What income is exempt from income tax?
- interest from national savings certificates
- interest from ISAs
- premium bond and gambling income
- benefits including UC, HB not state pension or JSA
- child benefit
What is the annual investment allowance?
£1,000,000 per year
What is the writing down allowance?
18% for most assets
6% for life long assets
What can be deducted under the annual investment allowance?
- costs of plant, machinery, computers, tools
- NOT cars, buildings or land but can be deducted by writing down allowance
What’s the overlap profit problem?
Businesses taxed on profits made in accounting period that ends on 5th April
Some profits in first year might be taxed twice if the business accounting period doesn’t match with HMRCs (basis period)- overlap profit
Won’t get back until trade ceases or changes accounting date to 5 April
What is the personal allowance?
£12,570
For every £2 over £100,000, PA reduced by £1
Income over £125,140 = no PA
What is the marriage allowance and what is required?
£1260
Conditions
- couple be married
- transferring spouse income must be less than PA
- receiver spouse must be basic rate tax payer
Transferor reduced allowance by £1260
Receiving spouse would be entitled to income tax reduction of 20% of £1260 = £252
What are the 4 options for trading loss?
1) current year/prior year loss relief
2) carry forward loss relief
3) carry forward relief on incorporation
4) terminal loss relief
