Tax Flashcards
What are the rates of commercial stamp duty?
0-150k at 0%
150-250k at 2%
250-1mil at 5%
Above 1mil at 6%
Business profits before tax are 200k. How much will the 2 directors be entitled to withdraw each?
200k x 0.19 = 38k
200k -38k = 162k after Corporation Tax
Could have dividend/bonus/etc of 81k each
When is corporation tax and the CT self assessment due?
Corporation tax within 9 months and a day of end of financial year
CTSA within 12 months of end of financial year
How would a private company be treated for IHT?
If the company is an unquoted trading company, the share value (excluding any cash) passes IHT free to beneficiaries because of Business Relief
How does someone qualify for entrepreneurs relief? (4)
Own more than 5% of ordinary shares
Business must be a trading company
Own shares for more than 2 years
Be an employee or director of the company
Why might someone benefit from delaying selling a business until a new tax year?
CGT payable a year later
Keep cash for longer
Make sure qualify for entrepreneurs relief
How does incorporation relief work? What if it’s not claimed?
As long as all the business and assets are transferred in return for shares, incorporation relief will automatically apply
CGT is deferred until shares are sold
Can chose not to claim relief, CGT would be payable immediately, would offset against allowance and pay CGT at highest rate
No eligibility to entrepreneurs relief as he will be retaining material interest in continuing business
State the conditions that apply in order for partners to qualify for entrepreneurs relief on sale of their business along with the tax position if these are met.
Individual must have been a partner in the business for at least 2 years before selling. Disposal can be all or part of their business within a lifetime limit of £10mil per person.
CGT is liable at 10% after deduction of any annual exempt amount and qualifying losses.
CGT implications on sale of personally owned property that was used within owners business.
Disposal is charged against CGT
May qualify for entrepreneurs relief as the property is let to a trading company in which they have an interest
Needs to have been held for 2 years
Can use annual exemption and excess is taxed at 10%
If entrepreneurs relief doesn’t apply gain taxed at 18/28%
