Tax Flashcards

Question

How does assets provided to employees work?

Answer 1

Assets for private use: If owned by employer- 20% x MV Employer rents asset- Higher of AV or rent paid by employee 1 mobile phone and bicycles exempt. No benefit if priv use insignificant

Answer 2

if the employer buys the gift then immediately gives it to the employee then taxable benefit is cost of asset to employer. If employer lends at first then gifts then its the greater of MV when gifted or MV first provided-less Benefit already taxed under priv use rules

Answer 3

=£25,300 x CO2 emissions % (as per car benefit) No reductions for employee contributions Time apportion too

Answer 4

Benefit or private use of company vans- £3600 Benefit for zero emission vans=£nil No benefit where the private use is insignificant. If employee share private use then - apportion the benefit on a just basis. Benefit on private use van fuel=£688- No reduction for employee contributions

Answer 5

Depends on if employer owns it or not. OWNS- AV and extra charges if extra improvements and house cost >£75,000. Formula=(Cost - £75,000)x2% If employer owned house more than 6 years before the employee moved in, use: MV+ capital improvements at start of tax year RENTS the property- Higher of AV or rent paid by employer

Answer 6

Furniture= 20% x cost of the furniture when first provided. Benefit arises each year the employee uses the furniture. IF accommodation is job related then the max is 10% of employees net earnings (Taxable employment income- living accommodation benefits)

Answer 7

We are able to deduct an income from other incomes that arent trading income. This is by either £50,000 or 25% of ATI- whichever is higher. ATI= total income -gross personal pension contributions.

Answer 8

6th April before date to date of cessation added to 12 months before ceasing to 5th April before ceasing

Answer 9

P x (51-n)/50 less than or equal to 50 years

Answer 10

*Necessary *Better performance of duties *To enable better performance of duties and customary to be provided *Provided for security reasons

Answer 11

OWNS the property- AV + (Cost-£75,000) x 2% Use MV if employer owned property for more than 6 years + any cap improvements up to start of the tax year RENTS- higher of AV or Rent paid by employer

Answer 12

Benefit= Cost to the employer - employee contributions Furniture= 20% x Cost of furniture when first provided Maximum benefit= 10% of employees net earnings which is taxable employment income minus living accommodation benefits

Answer 13

The taxable benefit made on a loan from an employer to employee. No taxable benefit where less than or equal to £10,000 or when interest paid on the loan would qualify for tax relief- eg a loan to buy plant or machinery.

Answer 14

Average method and strict method. Av- Av amount- Loss amount x rate given x time apportion Strict- 2% ORI used and minus Av loss given etc

Answer 15

£25,300 x CO2 emissions % No deduction for employee contributions towards cost of fuel. Time apportion but not for temporary ceassation.

Answer 16

£3600 and fot zero emission vans its £0. Time apportion if it was unavailable for more than 30 days

Answer 17

£688 No reduction for employee contributions towards private fuel costs

Answer 18

Cy and prior year claims are usually set against total income. This total income includes trading income and property income for example. There is a limit of how much other income can be used against a a loss which is the higher of £50k and 25% of ATI. ATI is Total income- gross personal pension contribution. Unless ATI is greater than £200k, then the max is £50k C/f is set against trading income. There are two special circumstances

Answer 19

Carry back three years FIFO basis against total income. Within the first four years of trade Claim within 12 months of end

Answer 20

Can carry back 3 years on LIFO basis against trading profit. Happens if loss made in final 12 months to cessation. 6th April bc to C Add overlap profits 12 months before C to 5th April before C Added together gives Terminal loss Claim within 4 years of end

Answer 21

income tax but is exempt from capital gains tax

Answer 22

Exempt from both income tax and capital gains tax

Answer 23

Cash receipts for the tax year are less than or equal to £150,000 and must stop using the basis once the its greater than £300,000

Answer 24

Net profit per accounts Add: Disallowable expenditure Expenditure allowable for tax purposes Taxable trading income not credited in the accounts Less: Expenditure not charged in the accounts but allowable for tax Income included in the accounts that is not taxable trading Capital allowances =Tax adjusted trading profit

Answer 25

Withdrawal of funds from a business’s profits by its owner. These are disallowable expenditure. Common examples are: - Business owner’s salary - drawings made by a sole trader/partner -any private element of expenditure (e.g. private use of a car or mobile phone by the sole trader) - excess payments made to the sole trader’s family member employees. Interest on late paid tax disallowable but interest on borrowing for purposes for trade is allowable.

Answer 26

-depreciation -loss on sale of non-current assets -cost of capital assets included within repairs and maintenance -capital related expenditure included within legal and professional fees

Answer 27

-repairs and maintenance are allowed costs. -improvements/enhancements are capital expenditure and therefore disallowed -expenditure required to bring an asset into a useable state is capital expenditure and therefore disallowable -if the whole asset is replaced the expenditure will be treated as capital rather than a repair

Answer 28

Cash Cars Gift edged securities and qualifying corporate bonds NS&I Certificates Premium bonds Prize & betting winnings Assets held in ISAs Trading inventory Receivables Wasting chattels