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ACA ICAEW > Tax Compliance > Flashcards

Tax Compliance Flashcards

1
Q

What is the basic personal allowance for 2023/24?

A

12570

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2
Q

How to calculate adjusted net income?

A

Net income - gross gift aid donations - gross personal pension contributions

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3
Q

At what income is the personal allowance withdrawn completely?

A

£125,140 and above

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4
Q

How much can a spouse transfer of their personal allowance to their spouse?

A

£1260

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5
Q

What conditions must be met for the marriage allowance transfer to be allowed?

A

Both spouses basic rate taxpayers

UK Residents

MARRIED

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6
Q

What are the nil rate bands for taxpayers - SAVINGS?

A

£1000 basic rate taxpayers

£500 higher rate taxpayers

£nil for additional rate taxpayers

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7
Q

What is the dividend mil rate band and who is entitled to it?

A

All taxpayers get £1000 nil rate bans

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8
Q

What are main sources of exempt income?

A

Interest on national savings certificates

Interest from ISAs

Betting, lottery and premium bond winnings

Certain social security benefits

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9
Q

When can an interest payment be deductible?

A

Buy plant or machinery for use in a partnership

Buy plant or machinery for employment purposes

Buy shares in a close company or employee controlled company

Invest in a partnership

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10
Q

What is t he child benefit rate for the eldest or only child?

A

1248

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11
Q

What is the child benefit rate for each other child (not eldest)?

A

827

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12
Q

What is the tax charge for a recipient of child benefit who earns over £50,000?

A

1% of the child benefit for every £100 of adjusted net income between £50,000 and £60,000

£60,000 and above = full charge

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13
Q

How to tax gift aid?

A

Gross up the donation amount if given net (x1.25)

Extend the basic rate and higher rate bands by the gross donation amount.

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14
Q

How to deal with GAYE?

A

deduct the amount of the donation via GAYE from the employment income

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15
Q

How to deal with gifting of assets to charity?

A

Deduction is given against total I come for gifts to charities of:

Shares and securities listed on a recognised stock exchange (UK or otherwise)

Land and Buildings

  • the deductible amount is the market value of the asset at the date of the gift
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16
Q

What is the basic rule for jointly owned assets?

A

Married partners are deemed to own the asset in equal proportions (50/50)

If declared, taxable income should be assessed based on the actual ownership basis.

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17
Q

How should dividends from jointly owned shares taxed?

A

Always taxed according to actual ownership

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18
Q

What is the cash basis of accounting?

A

Accounting for items for which the cash has actually been received or paid in the year

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19
Q

What conditions must be met in order to use the cash basis of accounting?

A

Property receipts must not exceed £150,000

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20
Q

What are the advantages of the cash basis of accounting?

A

Cash basis is simpler than accruals basis

Automatic bad debt relief

Only taxed when income is already received

Better for cash flows

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21
Q

Who must use the accruals basis?

A

Property businesses with receipts exceeding £150,000

Those who elect to use the accruals basis by choice

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22
Q

What are examples of allowable (deductible expenses)?

A

Legal, professional and admin costs NOT RELATED TO ACQUISITION

Finance Costs, ie interest payable on loans

Rates and taxes paid by landlords: ground rent, council tax

Insurance

Repairs and maintenance

Cleaning and Gardening

Replacement of domestic items (like for like)

Fixed rate deductions on motor vehicles

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23
Q

How to tax if property is partly owner occupied and partly let?

A

Pro rate expenses

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24
Q

When is replacement furniture not deductible?

A

The original cost of the first item of the furniture

The addition costs of an ‘improved’ replacement item above the cost of a like for like replacement

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25
Q

What can be deducted in terms of replacement furniture?

A

Amount that can be deducted is reduced by any proceeds from the sale of the old item but increased by any costs of disposal of the old item.

Remember - old item must not be available for use by the tenant.

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26
Q

In accruals basis, what relief is given for bad debts?

A

Debt written off by landlord if remains unpaid.

Relief is given for the amount written off.

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27
Q

What is rental loss carried forwards set against?

A

First available future property income

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28
Q

How is interest on mortgages or loans to buy furniture treated?

A

Deductible as a tax reducer

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29
Q

How to calculate the reduction for interest costs related to letting residential properties?

A

20% of the lowest of:

Finance costs for the tax year plus any finance costs brought forward

Property income for the tax year

Adjusted total income - income that exceeds personal allowance for tax year

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30
Q

What is the deduction limited by in finance costs?

A

Limited by the property income or adjusted total income then remaining finance cost not utilised.

It cannot be used to create a refund

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31
Q

What is the maximum rent a room relief?

A

£7500 exempt from income tax

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32
Q

RRR: if gross annual rent is > £7500, what options does the tax payer have?

A

a) apply normal property income rules

b) taxed on rental income in excess of £7500

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33
Q

RRR: what about if 2 or more people share a home?

A

Each has an RRR of £3750 (£7500 / 2)

The limit is always halved even if 3 or more co owners

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34
Q

How to deal with personal pension schemes?

A

Extend the bands

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35
Q

How to deal with occupational pension schemes?

A

Reduce employment income by the contribution amount

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36
Q

What is the maximum gross contribution that can be made by an individual into a pension annually?

A

Higher of:

Individuals relevant earnings chargeable to income tax in the year

The basic amount (£3600)

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37
Q

Who are employer contributions to pension schemes exempt for?

A

For the employee

No limit on contributions from employer but will count towards the annual allowance

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38
Q

Are employer contributions tax deductible?

A

Yes

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39
Q

What is the annual allowance for 23/24?

A

£60,000

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40
Q

What is the lifetime allowance?

A

1073100

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41
Q

When are general earnings treated as being received?

A

On the EARLIER of:

The date the payment is made

The date the employee becomes entitled to payment

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42
Q

When are general earnings treated as received for DIRECTORS?

A

Same as normal 2 plus:

Or the date the earnings are credited in the company’s records or accounts

The end of a period of account if earnings are determined before period end

The date of earnings are determined if the amount is not determined until after the end of the accounting perood

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43
Q

What is the taxable benefit for non cash vouchers?

A

Cost to employer less amount paid by employee (if any)

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44
Q

What is the taxable benefit on cash vouchers?

A

Cash obtainable less amount paid by employee

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45
Q

When is there no benefit on living accommodation?

A

No benefit if job related.

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46
Q

What is the basic charge?

A

Higher of annual value and rent paid

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47
Q

What is the addition charge calculation?

A

If accom cost over £75,000:

Cost - 750000 x 2.25%

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48
Q

Do not use

A

No answer

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49
Q

What is the taxable benefit on the provision of living expenses?

A

Generally taxable on costs to employer less amounts paid by employee

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50
Q

How to calculate private benefit on cars for private use?

A

Co2% * list price

Co2% increased by 4% for diesel cars not meeting RDES 2 standards

Max co2% = 37%

Reduce list price by up to £5000 for any actual capital contributions made by employee

Reduce benefit by any actual contribution made by the employee towards the use of the car

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51
Q

How to calculate fuel benefit?

A

Co2% * 27800

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52
Q

What is the flat rate benefit for the private use of a van?

A

3960

If zero emission van, benefit is 0

Flat rate benefit for provision of private fuel of £757

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53
Q

What is the benefit on assets being made available for private use?

A

20% of the market value of the asset when first provided less amount payable by employee

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54
Q

What are the general rules for when a deduction is allowed for an expense?

A

The employee is obliged to incur and pay the expense

The amount is wholly, exclusively and necessary in the performance of duties of the employment of employee

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55
Q

When may an employee deduct travel expenses?

A

Expenses were incurred in the necessary fulfilment of duties

They are not related ordinary commuting or private travel

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56
Q

Are specific reimbursements allowable as deductions?

A

Yes

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57
Q

Are general reimbursements allowable?

A

No

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58
Q

Are subscriptions to professional bodies deductible?

A

Yes

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59
Q

What is the allowable mileage expenses for a car or van?

A

45p for first 10000 miles, 25p thereafter

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60
Q

Rate per mile allowed for a motorcycle?

A

24p

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61
Q

What is the allowable rate per mile for a bicycle?

A

20p

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62
Q

What is the passenger payment rate per mile?

A

5p

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63
Q

What is the taxable benefit for the gift of an asset that was previously loaned to the employee?

A

HIGHER OF:

Current market value

Market value when asset was first provided for use less any amounts already taxed under the private use rules

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64
Q

When are employee loans exempt?

A

When total loan value is less than £10,000

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65
Q

How to calculate the benefit on a loan greater than £10k?

A

Loan balance * 2.25%

Less interest paid

= benefit

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66
Q

What are the common exempt benefits?

A

Employer pension contributions

A trivial benefit less than £50 and not work related

One mobile phone

Parking space at or near work

Reasonable removal expenses (up to 8k)

Provision of electric car charging points available to general employees

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67
Q

How to calculate benefit busing average method for loans?

A

Loan at start year + loan at end of year / 2

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68
Q

What is the strict method for calculating taxable benefit on loans?

A

Weighted average based on actual repayments

Time apportion the outstanding balance taking into account repayments and the months these repayments occurred

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69
Q

What are the badges of trade?

A

Profit seeking motive

Number of transactions

Nature of assets

Existence of similar transactions

Changes to the asset

Way sale was carried out

Source of finance

Method of acquisition

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70
Q

What do you add back during profit adjustment?

A

Add back anything that is not wholly and exclusively for the purpose of trade

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71
Q

What are the old CYB rules?

A

An individual is taxed on the adjusted trading profits for the 12 months period or account which ends in the tax year

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72
Q

How to calculate tax for year when a business commenced trading in the transition period 23/24?

A

The individual is taxed on the profits from the commencement date, to the 5th April

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73
Q

What to do with overlap profits?

A

Take them away from cessation of trade tax figure

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74
Q

What are the tax basis rules at cessation?

A

Profits taxed are:

Profits from the end of basis period of the penultimate tax year until the date of cessation (ie any profits not yet taxed)

LESS any overlap profits

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75
Q

What are the 2 parts of the transitional rules?

A

Standard part - first 12 months of the basis period

Transition part - period that begins immediately after the standard part ends

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76
Q

What are the 6 steps for calculating 2023/24 trading profits?

A

Step 1 - calculate the profit / loss of the ‘standard’ part of the basis period

Step 2 - calculate profit/loss from transition part of basis period

Step 3 - deduct overlap profits from step 2

Step 4 - add together standard and transition parts - if step 3 or 4 = 0 or a loss this is the profit / loss

Step 5 - calculate amount of total transition profit (lower of step 3 and 4). This is split over 5 years, 20% each year

Step 6 - taxable profit = step 1 + step 5

Or just step 5 (if step 1 gave a loss)

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77
Q

Do you time apportioned FYA?

A

No never

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78
Q

Do you time apportioned FYA?

A

No never

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79
Q

If a business is VAT registered, what cost is used for capital allowance calculation?

A

VAT Exclusive price

EXCEPT FOR

Cars (vat inclusive)

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80
Q

When can you claim back VAT on a car?

A

When it is a pool car with:

100% business use

Available to all employees

Must stay at business premises overnight

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81
Q

What assets are included in main pool?

A

All machinery, fixtures, fittings and equipment

Vans, forklifts, Lorries etc

Cars with co2 emissions of 50g/kn or less with NO PRIVATE USE

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82
Q

What is 100% FYA available on?

A

New plant and machinery (companies only)

Qualifying capital expenditure on research and development (companies)

New and unused cars with 0 co2 emissions

New and unused goods vehicles with zero co2 emissions

Electric charge point equip (before 6 April 2025)

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83
Q

What is AIA allowance for 12 months?

A

1 000 000

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84
Q

What should AIA be allocated to as a priority?

A

Qualifying special rate pool purchase

  • more tax effective
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85
Q

What can be included in the special rate pool?

A

Long life assets

Thermal insulation of buildings

Integral features

Solar panels

Cars with co2 emissions in excess of 50g/km

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86
Q

What is the WDA rate on the special rate pool?

A

6%

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87
Q

When is an item classed as a long life asset?

A

Working life of more than 25 years

Total expenditure exceeds 100k in 12 month accounting period (or prorate)

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88
Q

What are integral features?

A

Electrical systems
Cold water systems
Lifts escalators moving walkways
External solar shadonf

89
Q

Which types of asset are not included in the main pool but are included separately in their own pool?

A

Assets with some private use by sole trader

Short life assets

90
Q

When are short life assets used?

A

When all the AIA allowance has been used.

91
Q

When do you have a balancing allowance on the main pool / special rate pool?

A

Cessation of trade

92
Q

When do you have a balancing charge on the main pool or special rate pool?

A

Cessation of trade

OR

Balance on pool is negative

93
Q

When do you have a balancing allowance on a single asset pool?

A

Asset sold for less than TWDV

94
Q

When do you have a balancing charge on the single asset pool?

A

Asset sold for more than TWDV

95
Q

How to calculate capital allowances in the final period before cessation?

A

No FYAs, AIAs, WDAs given in final period

Disposal value of each asset deducted from the balance of pools giving rise to balancing allowances and balancing charges

96
Q

What is the calculation for the structures and buildings allowance?

A

3% straight line basis on qualifying expenditure

97
Q

When to prorate SBAs?

A

Accounting periods of not 12 months

Where structure brought into use or sold during the period

Or if any part of it is used as a dwelling

98
Q

What are qualifying structures for SBAs?

A

Offices

Retail and wholesale premises

Factories

Warehouses

Hotels

Roads walls bridges and tunnels

99
Q

What is qualifying expenditure for SBAs?

A

Construction cost or acquisition cost if bought from a developer

100
Q

What is not qualifying expenditure?

A

Cost of land

Cost of planning permission

Fees

Stamp taxes

101
Q

What to do with SBAs where a structure is partly used in trade and partly rented out?

A

A full allowance is claimed by the deduction from profits is apportioned between trading income and property income.

102
Q

What is s83 carry forward loss relief set against?

A

Future trading profits from the same trade

Carries forwards until fully utilised or cessation of trade

It is automatic

103
Q

What is s64 current year and or prior year set against?

A

Total income, NSI, SI then div

Time limited to current year and or prior year

All or nothing approach

104
Q

What is s64 current year and or prior year set against?

A

Total income, NSI, SI then div

Time limited to current year and or prior year

All or nothing approach

105
Q

What is s.261B TCGA relief against gains set against?

A

Gains before other capital losses

106
Q

What is s72 loss in first 4 tax years set against?

A

Total income (NSI, Si then Div)

Time limits - carry back to prior 3 years on a FIFO basis

107
Q

What is s89 terminal loss relief on cessation set against?

A

Trading profits from same trade.

Carry back to prior three years on a LIFO basis

108
Q

What is the loss relief restricted to for non active traders?

A

£25,000 when making a loss claim against total income or against capital gains

109
Q

When will a loss be restricted?

A

If a trader spends on average less than 10 hours per week personally involved in running the business

110
Q

What is the limit for s64 and s73 loss relief against total income for non trading income?

A

The higher of:

£50,000

25% adjusted total income for the tax year in which the deductions are offset

111
Q

How much taxable trading income will a partner with a notional loss have?

A

None

112
Q

What to do with notional loss for other partners?

A

The loss is reallocated to the remaining partners in proportion to the profit initially allocated to them

113
Q

What are examples of chargeable persons?

A

Individuals

Partners

Trustees

Companies

114
Q

Examples of chargeable disposals?

A

Sale of the whole or part of an asset

Gift of whole or part of an asset

115
Q

Examples of chargeable disposals?

A

Sale of the whole or part of an asset

Gift of whole or part of an asset

116
Q

What are exempt assets for capital gains?

A

Motor cars (including vintage and classic )

Wasting chattels

Non wasting chattels sold for a again with consideration that does not exceed 6k

Gilt edged securities

Qualifying corporate bonds

National savings certificates and premium bonds

Shares and investments in an ISA

117
Q

What are incidental costs of acquisition examples?

A

Legal fees

Surveyor fees

118
Q

What is the formula for part disposals?

A

Cost * a/ a + b

A = market value of part disposed

B = market value of sort retained

Any incidental costs are deductible in full

119
Q

What is the annual exempt amount for CGT?

A

£6000

120
Q

Rule of thumb for offsetting trading losses against capital gains?

A

In order to offset against capital gains, you need to offset the maximum pint possible in the year in which the capital gains occurred

121
Q

Capital gains % on assets?

A

10% or 20%

122
Q

What are gains on residential properties taxed at?

A

18% or 28%

123
Q

What capital gains are incurred on disposals between spouses and civil partners?

A

No gain no loss

124
Q

What value is used for cost when selling an asset after a transfer between spouses?

A

Market value, not cost

125
Q

What are the main share matching rules - in order?

A

Same day as disposal first

Following 30 days on FIFO basis (sole traders)

Any shares in the s.104 pool

126
Q

How to determine market value of quotes shares given as gifts?

A

Lower quoted price +

1/2(higher quoted price - lower quoted price)

ie. The mid point

127
Q

When is the payment on account due after the sale of a residential property?

A

Within 60 days of completion

128
Q

When is the payment on account due after the sale of a residential property?

A

Within 60 days of completion

129
Q

What are qualifying assets for rollover relief?

A

Land and buildings

Fixed plant and machinery

Goodwill (individuals only)

130
Q

When is rollover relief frozen until of depreciating assets?

A

Earliest of:

The disposal of replacement asset

10 years after the acquisition of the replacement asset

The replacement asset ceases to be used in the taxpayers trade

131
Q

What are qualifying assets for gift relief?

A

Assets used in a business carried on by the donor or donors personal company (at least 5% voting rights)

Shares or securities* in a trading company where either shares are unquoted or the company is the donors personal company

132
Q

When is gift relief not available?

A

Not available on the gift of shares or securities where the donee is a company

133
Q

When is gift relief restricted?

A

Where there’s a gift of qualifying shares in the donors personal company and the company holds some investments. This is restricted to:

Chargeable business assets / chargeable assets

  1. Where actual consideration is received
134
Q

Examples of chargeable business assets?

A

Freehold and leasehold premises
Goodwill
Plant and machinery

135
Q

What is the limit on BADR?

A

1 million

136
Q

Conditions for qualifying for BADR on unincorporated business?

A

All or partial ownership of the business

Owned for at least 2 yeats

137
Q

Conditions for qualifying for BADR on disposal of shares?

A

> 5% ordinary shares / voting rights

Officer or employee

Trading company

Above conditions met for 2 years

Not restricted for non trade assets

138
Q

Conditions for qualifying for BADR on assets?

A

Sold following cessation of the business

Business owner for 2 years prior to cessation eith assets sold within 3 years of cessation

139
Q

What happens if an individuals shareholding is diluted to below 5% as a result of a share issue?

A

It is possible to elect for BADR to continue to be available for gains up to the date of the share issue

140
Q

What are examples of deemed occupation which must be followed by a period of actual occupation?

A

3 years for any reason

Anytime in overseas employment **

Up to 4 years working elsewhere in UK

** does not need to be followed by occupation if prevented from occupying by employer

141
Q

What is always deemed occupation?

A

Last 9 months prior to sale

142
Q

What is the lifetime limit on investors relief?

A

10 mil

143
Q

What qualifies for investors relief?

A

Shares disposed by an individual must:

have been subscribed as new ordinary shares by individual making the disposal

Be in an unlisted trading company, or hold co of a group

Have been issued by the company on or after 17.03.16 and were held for at least 3 years after 6.04.2016

Be held continuously for 3 years before disposal

144
Q

What is PRR calculated as?

A

The relief is calculated as:

Actual and deemed occupation / ownership x net gain

145
Q

What is letting relief figure used as?

A

Lowest of:

Letting gain

PRR

£40,000

146
Q

What is the remittance basis?

A

Only foreign income / gains enjoyed in the UK are taxed in the UK.

All income remitted is taxed as NSI and therefore it cannot benefit from savings or dividends nil rate bands

147
Q

How to access the remittance basis?

A

Automatic with 0 negative consequences if I remitted income / gains are less than £2000

Otherwise must claim on self assessment tax return and:
-lose entitlement to personal allowance and annual exempt amount
-pay remittance basis charge if long term resident ages over 18

148
Q

What is double taxation relief?

A

Lower of:

Overseas tax suffered

UK tax on overseas income / gains

149
Q

What is class 1 primary national insurance - who pays it, what is it based on, when is it due and what rate is it taxed at?

A

Employees pay it

Based on cash earnings, incl mileage payments, readily convertible assets and vouchers

Due every earnings period, through PAYE

Rate: 12% between primary threshold and upper limit. 2% on excess above this

150
Q

What is the rate for class 1 secondary NI?

A

13.8%

151
Q

What is the rate for class 1a NI?

A

13.8%

152
Q

What is the rate for class 1B NI?

A

13.8%

153
Q

What is the rate for class 2 NI?

A

£3.45 per week if earnings over 12570

154
Q

What is the rate of class 4 NI?

A

9% above lower limit and below upper

2% above upper

155
Q

When is the employment allowance available (NI Terms)?

A

Applies to most employers

When employee is NOT a single director

Class 1 Secondsry liabilities less than £100k

156
Q

How to calculate disposable income?

A

Income received after income taxed and national insurance contributions

157
Q

How to calculate effective rate of tax for individuals?

A

Dividing the total tax liability including income tax and NICs by their total income

158
Q

What are the exemptions on lifetime gifts and transfers on death?

A

Transfer to spouse or civil partner

Gifts to Charities

Gifts to Political parties

159
Q

What are the marriage gift allowances?

A

£5000 parent
£2500 remote ancestor
£1000 any other case

160
Q

Small gift exemption value?

A

Less than £250

161
Q

What is the annual exemption?

A

£3000

162
Q

How to use annual exempt amount?

A

Used against transfers in chronological order.

Unused excess is used can be carried forward to next tax year

Current year AE must be used before any amount from previous year

163
Q

What rate of tax is used when the donor pays the tax?

A

25%

164
Q

What are not examples of official debts?

A

Gambling debts

Promises to pay someone

165
Q

What are the hallmarks for the residence nil rate band?

A

Individual dies on or after 6 April 2017

Death estate includes their home

Home inherited by direct decscendants of the deceased

166
Q

How much is the residents nil rate band?

A

£175,000

167
Q

How to taper the nil rate band and when?

A

If value > £2million:

Tapered by £1 for every £2 which the estate exceeds £2million

168
Q

How to calculate the value of an asset transferred for IHT purposes?

A

Value of holding prior to transfer
Less value of holding after transfer

169
Q

How are quoted shares listed on the stock exchange valued for IHT?

A

Lower of:

  • Quarter Up Rule
  • average of the highest and lowest marked bargains on the day of the transfer
170
Q

What is the quarter up rule in IHT?

A

Lower quoted price + 1/4(higher quoted price less lower quoted price)

171
Q

What is related property hallmarks?

A

Property held by the transferor and:

  • held by spouse or civil partner
  • held or has been held in last 5 years by a charity or political party
172
Q

How to calculate proportionate value for related property?

A

Value of property transferred at unrelated value / value of property transferred at unrelated value PLUS value of related property at unrelated value

x value of whole property

173
Q

What is fall in value relief?

A

If an asset gifted in lifetime is sold for less than original transfer value or market value at death is lower, then taxpayer can elect that the death tax is based on the lower value.

174
Q

How to transfer nil rate bands between spouses?

A

Unused % of nil rate band is transferred across to the other spouse

175
Q

How to calculate quick succession relief on entire estate?

A

Tax paid on earlier death x (value of estate - tax paid on earlier death) / value of whole estate

176
Q

How to calculate QSR on specific assets?

A

Tax paid on earlier death x value of asset at death / value of estate x relevant %

  • relevant % found in hard man’s
177
Q

What is the reduced rate for IHT and how to gain it?

A

36% IF you leave at least 10% of net chargeable estate to charity

178
Q

Business property relief rates?

A

50% or 100%

179
Q

Hallmarks for business property relief?

A

Owned for for at least 2 years prior to transfer

180
Q

When does business a property relief not apply?

A

Business consists wholly or mainly dealing in securities, stocks, shares, land and buildings or holding investments

  • where there is a contract in place to sell the property
181
Q

How to calculate the value of the property that will qualify for relief?

A

Net assets - investments / net assets

182
Q

How to calculate the value of the property that will qualify for relief?

A

Net assets - investments / net assets

183
Q

Penalties on late filing of IHT?

A

Immediate £100 fixed penalty

Daily penalties of up to £60 after failure to deliver had been declared by court or tribunal

After 6months a further £100 fixed penalty

After 12 months, a further penalty of up yo £3000

184
Q

Penalties on late filing of IHT?

A

Immediate £100 fixed penalty

Daily penalties of up to £60 after failure to deliver had been declared by court or tribunal

After 6months a further £100 fixed penalty

After 12 months, a further penalty of up yo £3000

185
Q

What is the super deduction rate?

A

130%

186
Q

What is super deduction available on?

A

New or (not second hand) assets

187
Q

What is super deduction / FYA NOT available on?

A

Second hand items
Cars
Not available in period of cessation of trade

188
Q

When was full expense relief available?

A

Between 1 April 2023 and 31 March 2026

189
Q

What are the benefits of full expense relief?

A

FYA @ 100%
Main pool assets only
New (not second hand) assets
Not available for cars
Not capped
Balancing charge on disposal (100% of lower of proceeds and costs)

Cannot claim FYA and AIA on same expenditure

190
Q

How to split long periods of account?

A

First 12 months

Then the excess separately

191
Q

How to calculate augmented profits?

A

Total taxable profits + exempt ABGH distributions

192
Q

Where does marginal relief apply?

A

Where augmented profits are over £50,000 but do not exceed £250,000

193
Q

How to calculate marginal relief?

A

(Upper limit - augmented profits) x taxable total profits x 3/200

194
Q

When is a company associated with another company?

A

If:

One company is under the control of another company

Both are under common control of a third party

Dormant companies are excluded

Included non UK resident companies

if a company is associated for part of the accounting period, treat as associated throughout

195
Q

How to calculate indexation allowance?

A

Cost x RPI in month of disposal(or Dec2017) - RPI in month of expenditure / RPI in month of expenditure

196
Q

How many decimal places for indexation?

A

3

197
Q

How to treat capital losses in companies?

A

Current year loss automatically offset against other gains in same accounting period

Excess capital losses are carried forwards and set against the first available gains in the following accounting period.

198
Q

Order of share disposals for companies?

A

Any acquisitions made on same day as date of disposal

Any acquisitions within previous 9 days on a FIFO basis

Shares in s.104 pool acquired on or after 1 April 1982

Any shares in 1982 pool

199
Q

Do you index on a bonus issue?

A

No

200
Q

What IFA expenses are adjusted for tax purposes?

A

Any amortisation or impairments

ALWAYS ADD BACK

201
Q

Conditions for a small or medium sized business?

A

Fewer than 500 employees

And either:

Annual turnover not exceeding 100 million euros

Annual balance sheet not exceeding 86 million eiros

202
Q

When is a company resident in the UK?

A

If it is incorporated in the UK

Incorporated outside of the UK but its central control and management are exercised in the UK

203
Q

How does current year loss relief work for companies?

A

Claim to set losses against total profits in the same accounting period.

204
Q

What is terminal loss relief?

A

Can be carried back against companies profits for preceding 36 months on a LIFO basis

205
Q

What is the priority of loss relief claims?

A

First to last:

  • deficits on non trading loan relationships
    -property business losses
  • trading losses of the current period
206
Q

What is a group for group relief purposes?

A

One company is a 75% direct or indirect subsidiary of another company

Or

Both companies are 75% direct or indirect subsidiaries of a third company

207
Q

How can group relief be surrendered for the current year?

A

Can be used against:

Trading losses

Deficits on non trading loan relationships

Excess qualifying charitable donations

Excess property business losses

208
Q

What is test 1 for partial exemption?

A

a) total input VAT is less than or equal to £625 on average

b) exempt supplies are less than or equal to 50% total supplies

209
Q

What is test 2 for VAT partial exemption?

A

Only do if test 1 failed.

a) total input VAT less input tax directly attributable to taxable supplies less than or equal to £625 on average

and

b) exempt supplies of less than 50% of total supplies for a period

210
Q

How to work out % taxable sales?

A

Supplies of taxable items / total supplies

Round up to nearest whole %

211
Q

What are advantages of opting to tax?

A

Vendor / landlord can reclaim import tax on original costs and ongoing t expenses in relation to the property

212
Q

What are the disadvantages of opting to tax?

A

If purchaser or tenant is not VAT registered they cannot recover VAT

Increased price for the buyer

213
Q

What does the capital goods scheme for VAT apply to?

A

Single computers costing > 50k exclusive of VAT

Land and buildings costing > 250k exclusive of VAT

Aircrafts, ships, boats and vessels > 50k exclusive of VAT

214
Q

What is stamp duty payable on?

A

Paper based transfers of shares

215
Q

What is rate for stamp duty?

A

Purchaser pays 0.5% consideration rounded up to the nearest £5

No duty if consideration is less than £1000

216
Q

What is stamp duty land tax charged on?

A

Chargeable on land transactions

217
Q

What is SDLT calculated on?

A

The VAT inclusive amount and it is payable by the purchaser

218
Q

What are the exemptions from SDLT?

A

Transfers for no chargeable consideration (gifts)

Transfers on divorce

Transfers on variation of a will

Transfers of land between 75% group companies

ACA ICAEW (3 decks)

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