Tax BPP notes Flashcards
Case law?
Tax cases taken to court, judge decision forms case law, sets precedent for future cases
Exempt or chargeable?
Scholarships
Income tax repayment interest
Betting winnings
All exempt
Savings income falling in the starting rate band is taxed at ___, which only applies to taxpayers with NS taxable income of _______
0%, less than £5,000
Describe the nil rate savings band
£37,500: £500 taxed at 0%
Dividend nil rate?
£2,000
Computing tax payable steps (2)
1) calculate tax liability on all income
2) deduct tax suffered at source
Charity gross donation = ?
Net x (100/80)
Taxable benefit = cost to _____ of providing the benefit
Employer
Always _____ _______ taxable benefits if only available for part of tax year
Time apportion
Cash voucher benefits should be treated as what?
Cash benefits
When is employer accommodation taxable?
When not job related
What three tests are there for determining if accommodation is job related? How many of these must it meet?
- Necessary
- Customary
- Security
Only one
How is tax on accommodation determined? (3)
- Basic charge: higher of rental value or annual value
- If original cost > 75,000, then ROI at start of year * (cost-75,000)
- Original cost + capital improvements before start of tax year
When can directors claim accommodation benefits? (2)
1) own <6% of the company
2) they work full time or the company is non-profit
Under expenses of living accommodation, furniture= ?
20% * MV
Taxable process for cars?
C02 emissions-75 = b
B/5 + 20 = benefit %
Cars registered from 6 April 2020 get a ____ reduction
2%
Vans for private use: benefit = ?
£3490
Vans for private use: separate fuel benefit = ?
£666
IT and NICs are paid by ____ each month
19th (22nd for electronic payments)
Employers of over _____ must pay PAYE electronically
250
If monthly pay totals <15001, employer can pay _______
Quarterly
PAYE code: positive normal?
Allowances - deductions
Remove last digit, add L for basic personal allowance
PAYE code: negative normal?
Allowances - deductions
Remove last digit
Deduct 1
Add K at beginning of code
PAYE code letter for marriage allowance transferor?
Transferee?
N
M
If trading receipts < ______ or ________, trading income is not taxable
£1,000
Allowable expenses as normal
What is the trading allowance?
£1,000
Gifts are allowed if they cost less than ____
£50
Renting cars:
C02 > 110g/km:
C02 < 110g/km:
C02 > 110g/km and private use:
Flare rate disallowance: 15% * hire charge
No adjustment
85% * hire charge * business %, then disallow the balance
Capital allowance assets?
Assets performing a ‘function’ within the business rather than forming part of the setting
Capital allowances are calculated for ______ not _____
Period of account, tax year
Firs year allowance? Examples?
100% relief for expenditure on certain assets
New and unused zero emission goods vehicles, new qualifying low emission cars, electric vehicle charging points
Annual Investment Allowance?
200,000 pa
Cash basis accounting?
An election to use the cash basis of accounting for the calculation of taxable trading income, which can be made by unincorporated businesses
Secondary Class 1 contributions are suffered by _______
The employer
Class 1A contributions formula:
Who is it suffered by?
Taxable benefits * 13.8%
The employer
Class 2 NIC rate?
Who does it apply to?
£3.05 a week
Self-employed individuals, aged 16 to state pension age
Class 4 NICs are payable self-employed individuals based on their ____________
Taxable trading profits
When should you inform HMRC if a return is not automatically issued?
5/10/21
Who can use a short tax return?
When is it due?
Employees, pensioners and some traders with turnover < £85,000
Normal submission due dates
How long does HMRC and the taxpayer have to amend tax returns?
HMRC: within 9 months of actual filing date
Taxpayer: 12 months of normal submission date, or 4 years if overcharged tax
If a balancing payment is less than ______, an employed taxpayer can choose for this to be collected via next year’s PAYE instead of income lump sum
£3,000
POA due dates
1/01
1/07
Corporate tax and VAT records must be kept for _______ years from end of accounting period
6
Income and capital gains tax must be kept until when?
Fifth anniversary of 31st January following end of tax year
Acquisition costs, incidental costs of acquisition and enhancement expenditure are all ______ costs for CGT purposes
Allowable
Annual exempt amount = ?
£12,300
Taxable gains = _______ - Annual Exemption
Chargeable gains
CGT: higher rate income taxpayer taxed at _____
CGT: basic rate income taxpayer taxed at _____ for their unused basic rate, then ______ for the remainder
20%
10%, 20%
As a corporation is a different entity to its directors and shareholders, there is no need to adjust for _______ expenses or appropriations of profit
Private
TTP interest = all interest income - interest payments on ________ loans
Non-trade
Property income= accrued rental income - ___________
Accrued rental expenses
Indexation allowance equation?
((RPI at disposal or at December 2017 - RPI at date of expenditure)/RPI at date of expenditure) * cost
Qualifying donations for corporations are deductible from total income and gains when _____, not _______
Paid, accrued
Corporation tax equation?
Corporation tax = TTP * 19%
Augmented profits equation?
Augmented profits = TTP + exempt ABGH distributions
Exempt ABGH distributions: dividends received from Uk and overseas non-51% group companies
_____ companies should be ignored when looking at related 51% group companies calculations
Dormant
Large and Very Large company corporate tax instalments= ?
1/4 * estimated CURRENT YEAR liability
From the beginning of first chargeable accounting period, you have __ months to tell IR that you have got started
3
When does HMRC send out returns?
31 December
How long do corporations have to submit a full return?
A whole year after the end of the accounting period
Repayment interest to taxpayer runs later of ______ or ______
Due date
Payment date
Can exempt VAT supplies have input VAT recovered?
No
Historic test for VAT registration?
Taxable supplies > £85,000 last 12 months, must register
Actual tax point is earlier of ? (3)
Goods made available
Payment received
Invoice issued
3) instead of 1) if invoice issued within 14 days
Bad debt is available if?
Debt > 6 months overdue AND
Bad debt written off in books
How long does one have to recover bad debt relief?
Within four years of becoming eligible for relief
Input VAT can be recovered on the first return if: (2)
Goods supplied within 4 years of registration
Services supplied within 6 months of registration
Return (VAT 100) is to be returned and payed when?
7 calendar days after the last day of the month following the end of the return period
How long must companies keep VAT records for?
6 years
POA due from substantial traders (VAT liability > 2.3m) is what?
1/24 * previous year’s total VAT liability paid at end of second and third months in each quarter
A simplified VAT invoice can be issued for supplies under _____
£250
Annual Accounting Scheme: instalments? VAT return and balancing payment?
9 * 1/10 * estimate VAT liability (end of months 4-12)
Within 2 months after y/e
Expected taxable supplies in following < _____ for Annual accounting scheme?
£1.35m
Penalty for first late payment of VAT?
None, but triggers a surcharge liability notice (SLN) which lasts for next 12 months
VAT errors can be corrected next return given that: (2)
Was not deliberate
Error was less than £10,000 or 1% * net taxable turnover
HMRC can file a notice of intention by: (2)
First anniversary of actual submission date
If late, quarter day following first anniversary of actual submission date (31 Jan, 30 April, 31 July, 31 October)
Diesels get a ___ supplement, h less told that the car meets ______ standards
4%, RDE2
Pension advice up to _____ is exempt
£500
Fuel benefit equation?
Benefit= 24,500 * %car benefit
Non cash gifts from third parties are exempt if worth less than _____
£250
Childcare vouchers allowance?
For higher taxpayers?
For additional rate taxpayers?
55
28
25
A staff party is exempt for the individual so long as the cost in relation to the individual is no more than _____ in the tax year
£150
Childcare provided by a person’s employer is ______
Exempt
A benefit provided by a third party is _____ for a person’s tax
Exempt
If additions and disposals in main pool is less than ______, write off the balance as WDS in place of normal allowances
£1,000
Employees over retirement age no longer pay Class 1 ______ contributions, but must pay Class 1 ______ contributions
Primary, secondary
An employee with no supplementary income other than interest will only need to retain their tax return records for ______ year(s) following the tax return submission deadline for the year
One
For ______, indexation is not available
Individuals
If a VAT return is late but payment is not, there a default surcharge of _____
£0
Penalties for late payment do or do not apply to payments on account?
They do not
VAT is reclaimable on goods and capital assets purchased within ______ years before registration and still held by the business at registration
Four
VAT on motor cars with any amount of private use is ______
Irrecoverable
When calculating indexation, the indexation factor must be _______
Rounded to 3 decimal places
Interest on discovery assessments runs from the _______ until the ________ the tax is paid
Due filing date
Day before
Does HMRC collect repayments of student loans?
Yes
If a surcharge is under _____ regarding VAT payments, the surcharge will not be imposed
£400
