Tax - incom, cgt, etc

Question 1

General CGT Calculation Steps

Answer 1

Taxable gain(profit- reliefs+ annual exemption) x Tax percent progressively =CGT

1. Identify and Calculate Gain:
   Sale Proceeds - Acquisition Costs (purchase price + any incidental costs) = Initial Gain
2. Deduct Disposal Costs:
   Initial Gain - Disposal Costs = Adjusted Gain
3. Apply Annual Exemption and reliefs: Adjusted Gain - Annual Exemption (£3,000 for 2024/25) = Taxable Gain
4. Offset Losses (if available):
   Use current or previous year losses to reduce Taxable Gain
5. Apply Tax Rates: progressively
   0-37,700 - 10% for basic rate taxpayers (18% for non residential property)
   37701+ 20% for higher/additional rate taxpayers (28% for non residential property)
6. Calculate CGT:
   Taxable Gain × Applicable Rate(s) = Total CGT Due

Question 1

types of Vat and the percentage? (4)

Answer 1

“standard rated: 20%

reduced rated: 5%

zero rated: 0%

exempt”

Question 2

Income tax

Answer 2

**“individuals: **
- income and capital gains tax
- on the basis of a tax year
- 6 April to 5 April

**companies **
- corporation tax
- basis of financial year
- 1 April to 31 March”

Question 3

Hold over relief of Gift of buis asset

Answer 3

both must elect to use holdover relief
Donor pays no CGT, donee pays cgt when eventually sold (at donor market value.

The gain from the donor is “held over” to the recipient.
The recipient inherits the donor’s original cost basis, so no CGT is due at the time of the gift.

Question 4

7 steps in assessing income tax

Answer 4

“x7: total, net, taxable, split, band, rates, add (TRP S sRA)

1 – TOTAL INCOME

2 – less available tax reliefs (interest on qualifying loans and pension contributions) = NET INCOME

3 – less personal allowance: £12,570 (reduce by £1 for every £2 of net income above £100,000) = TAXABLE INCOMe

4 – split the taxable income into non-savings, savings and dividend income: taxable less (savings + dividend) = non-savings income

5 – calculate whether the personal savings allowance is available (ie looking at the taxable income figure to see which income tax band it ends in)

6 – apply relevant rates

7 – add together the amounts of tax calculated at step 6 TOTAL TAX LIABILITY”

Question 5

what are the vat rates for rach of the following :
“standard rated: 20%

reduced rated: 5%

zero rated: 0%

exempt”

Answer 5

“Standard Rated
– Generally, the standard rate of VAT is 20%. A supply by a business will be standard rated unless it falls within one of the other three categories.
– A VAT registered business charges VAT at standard rate on its outputs and recovers any VAT suffered on its inputs (unless it makes supplies which fall into the exempt category below).

Reduced Rated
– A very limited number of types of supply are charged at 5%.
These include supplies such as domestic heating and power, installation of mobility aids for the elderly, smoking cessation products and children’s car seats.

Zero Rated
– Further supplies are zero rated for public policy reasons. Zero rated supplies include food (within certain categories), sewerage and water, books / newspapers, talking books for the blind, new houses and the construction of new houses, public transport and children’s clothing.
– Zero rated supplies fall into the category of taxable supplies. This means that when a VAT registered business makes zero rated supplies it charges VAT at the rate of 0% on its outputs and it can recover any VAT suffered on its inputs. This is therefore a very favourable supply for a business to make.

Exempt
– Supplies that are exempt include the provision of insurance, finance, education / health services and the sale of land and buildings (unless it comprises a new commercial building or the supplier of a commercial building has chosen to make the supply standard rated by waiving the exemption).
– When a business makes exempt supplies it does not charge VAT on its supplies but equally it is notable to recover any VAT suffered on its inputs. This input tax is a cost to the business.”

Question 6

Calculation of TTP for Corp tax

Answer 6

**“chargeable gains + income profits **

chargeable gains =
+ sale proceeds
- allowable expenditure
- indexation allowance
- capital/trading losses

income profits =
+ income receipts
- deductible expenditure
- capital allowance
- trading losses”

Question 6

Corp tax- payable on?

Answer 6

corporation tax is payable on