Taxation Flashcards
Topic 3
Name some taxes
Income Capital gains Corporation VAT Inheritance
What age is NIC applicable to
16-65
What act changed the state pension age
Pensions act 2011
Wwho must pay HRMC electronically for payments of NIC
Large companies
250+ people
Payment must be no later than 22nd of the month
Whatee the pay requirements for companies with less than 250 employees for NIC?
They can opt to pay electronically
Due date is 22nd of the month if paid electronically
If paid via post payment must reach HMRC by 19th of the month
Under what circumstances can employers request to pay NIC quarterly?
If their payments normally amount to
Corporation Tax
2015 it was reduced to 20%
Apr ‘17 - Apr ‘19 it was 19%
Apr ‘20+ it is 18%
When does a business have to register for VAT
If taxable turnover for previous months is over £85,000 or if they expect it to go over this limit soon
What are the return detail on the VAT form that is sent to HMRC quarterly
VAT charged on sales to customer during the period
VAT paid on purchases
What different VAT rates are there
Nil
Zero rate 0%
Reduced rate 5%
Standard rate 20%
What items are in nil rate
Insurance
Fundraising events by charities
Membership subscriptions
What items are covered in zero rate vat
Food but not meal in pubs restaurants or hot takeaways Books Childredns clothes Public transport Water and sewage
What items are covered in reduced rate vat
Installing energy saving materials Domestic fuel and power Sanitary hygiene products Children car seats Contraception Certain property renovations
Who are capital allowances available to?
Sole traders
Self employed persons
Partnerships
Companies and orgs liable for Corp tax
How much can SMEs claim for capital allowances?
100% of the first year allowance up to a limit of £500,000 for plant and machinery
When must a business use writing down allowances
It has already claim AIA on items worth a total of more than the AIA amount
The item doesn’t qualify e.g. cars / gifts or assets owned before they were used for business purposes
WhT us the Annual investment allowance (AIA)
£200,000 for 12 month periods from Jan ‘16
What is capital gains tax
A tax on the profit gains released on the disposal of an asset by individuals, trusts and personal representatives
It is the gain that is taxed, not the money recieved for the asset
What is classed as disposal of an asset in the context of CGT
Selling it Gifting it Transferring it Exchanging it Receiving compensation for it (insurance payouts)
What assets are exempt from CGT
Private cars and personal possessions disposed of for less than £6,000
What is entrepreneurs relief
Available to individuals and some trustees of settlements (not companies) for
Gains made on the disposal of all or part of a business
Gains made on disposal of assets following the cessation of a business
Gains made by certain individuals who were involved in running the business
What is the limit for entrepreneurs relief
£10m is the lifetime limit
CGT is charged at 10% on all qualifying profits
Inheritance tax
Tax on an estate when somebody dies subject to certain limits.
What is the limit of IHT
£325,000 or if everything is left to a spouse
This can increase to £650,000 for married couples when the second partner dies
Tax payment dates
31 Oct - deadline for sending in paper tax returns
31 Jan - filing tax returns online
31 Jan - paying tax due previous year and first payment for the current tax year
31 July - second payment on account
SME Corp tax payment is due when
9 months and 1 day after the end of the accounting period
Large companies Corp tax payments due
Quarterly basis in months 7 10 13 16 following the start of an accounting period
Made on the 14th day of the month
Tax records law
A business must keep records for at least 5 years and 10 months after the end of the tax year by law
Important documents
Sale ledger Purchase ledger Invoices Inventory records Cash books Bank statements
