SHU Exam Questions

Question 1

What defines a progressive tax system?

Answer 1

In a progressive tax system, the tax rate increases as the taxable amount increases, meaning as income rises, the proportion of income paid in taxes also rises.

Question 2

Where does the 2% rate used in the calculation of the capital element of a lease premium come from?

Answer 2

The 2% rate is specified by UK tax law to apportion the premium between capital and revenue elements for leases longer than 50 years. It ensures a portion of the premium is treated as a capital receipt.

Question 3

Can a company claim a trading loss against the previous year’s profits without first relieving it against the current year’s profits?

Answer 3

No, a company must first relieve the trading loss against the current year’s total profits before carrying back any remaining loss to the previous year.

Question 4

What are the tax benefits of being a member of a registered pension scheme

Answer 4

The benefits include tax relief at the marginal rate on contributions, employer contributions not being a taxable benefit, tax-free growth within the scheme, and the ability to withdraw some funds tax-free upon retirement.

Question 5

How is the High-Income Child Benefit Charge (HICBC) calculated?

Answer 5

The HICBC is 1% of the Child Benefit received for every £100 of adjusted net income over £50,000.

Question 6

How is the allowable cost calculated for part disposal of an asset?

Question 7

How is the chargeable gain or loss calculated for chattels bought for more than £6,000 and sold for less than £6,000?

Answer 7

The sale proceeds are deemed to be £6,000 for the purpose of calculating the chargeable gain or allowable loss.

Question 8

What are chattels in the context of taxation?

Answer 8

Chattels refer to tangible, movable property—items like household furniture, antiques, and motor vehicles. They are subject to Capital Gains Tax (CGT) if the disposal proceeds exceed £6,000 and the chattel isn’t exempt. Private cars are exempt from CGT, and some chattels with limited lifespans are also exempt.

Question 9

How is roll-over relief calculated when a business asset is sold and the proceeds are reinvested in a new qualifying business asset?

Answer 9

Roll-over relief allows deferring the gain by reducing the base cost of the new asset by the amount of the gain. If the full sale proceeds are not reinvested, the difference between the sale proceeds and the reinvested amount is the chargeable gain.

Question 10

How are capital losses carried forward calculated when there are current year gains and losses, brought forward losses, and an Annual Exempt Amount (AEA)?

Answer 10

Offset the current year’s gains with current year’s losses first, then apply the Annual Exempt Amount (AEA) to the remaining gains. Offset any remaining gains with brought forward losses. Any unused brought forward losses are carried forward to the next tax year.

Question 11

Can capital losses suffered in one group company be relieved against the total income of another group company?

Answer 11

No, capital losses can only be offset against capital gains, not against the total income.

Question 12

What is gift relief, and how does it affect the calculation of chargeable gain and base cost?

Answer 12

Gift relief allows deferring part of the gain when a business asset is given away. The chargeable gain is reduced by the deferred amount, and the recipient’s base cost is the market value minus the deferred gain.

Question 13

What is the final period exemption in PPR relief, and how does it apply?

Answer 13

The final 9 months of ownership are always treated as deemed occupation for PPR relief purposes, allowing for situations where the homeowner may have moved out while the property is being sold.

Question 14

What does NRE stand for, and how does it affect pension contributions?

Answer 14

NRE stands for Net Relevant Earnings, which determine the maximum amount of tax-relievable pension contributions, limited to the lower of the annual allowance (including carry forward) or 100% of NRE.

Question 15

What is the relevant amount for determining payments on account, and what taxes does it include?

Answer 15

The relevant amount for payments on account is based on the previous tax year’s income tax and Class 4 National Insurance Contributions (NICs), excluding any amounts deducted at source. It does not include capital gains tax.

Question 16

How is the taxable benefit for business mileage calculated if the reimbursement rate exceeds HMRC’s approved rates?

Answer 16

The taxable benefit is the difference between the total amount reimbursed by the employer and the total approved mileage allowance payments (AMAPs).

Question 17

Which classes of National Insurance Contributions (NICs) are paid by individuals who are both employed and self-employed?

Answer 17

Individuals who are both employed and self-employed pay Class 1 NICs on their employment income and Class 2 and Class 4 NICs on their self-employment income.

Question 18

By what date should any Class 1A National Insurance Contributions be electronically paid to HMRC?

Answer 18

Class 1A National Insurance Contributions should be electronically paid to HMRC by 22 July following the end of the tax year.

Question 19

What is the earliest date by which pre-trading expenses must be incurred to be deductible against self-employment income?

Answer 19

Pre-trading expenses can be claimed if they were incurred up to 7 years before the business starts trading.

Question 20

What form does an employer complete and give to HMRC and the employee that summarizes all taxable benefits received by the employee in the tax year?

Answer 20

Form P11D.

Question 21

How do you calculate a partner’s total profit share in a partnership with pre-allocated profits and a residual profit-sharing ratio?

Answer 21

Calculate the partner’s pre-allocated profits (e.g., salary or interest), subtract the total pre-allocated profits from the total partnership profits to find the residual profits, then allocate the residual profits according to the profit-sharing ratio.

Question 22

What is the basis period for a sole trader who ceases trading within a tax year?

Answer 22

The basis period is from the end of the previous basis period to the date of cessation.

Question 23

Are Annual Investment Allowance, Superdeduction, or First Year Allowance deductible in the final accounting period when a business ceases trading?

Answer 23

No, these allowances are not deductible in the final accounting period. Instead, balancing allowances or charges apply.

Question 24

By what date must a business inform HMRC that it has ceased to make taxable supplies?

Answer 24

Within 30 days of stopping making taxable supplies.