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TAXATION > Taxation Exam > Flashcards

Taxation Exam Flashcards

1
Q

Tax adjusted profit

A 
operating profit
add disallowed expenditure
less non trading income
Capital allowance
TTP
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2
Q

Disallowed expenditure

A

Drawings, Cap Exp, Depreciation, Legal fees, Repairs to new, Motor, Telephone, Bad Debt provisions, GAD, Trading stock (20/80)

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3
Q

Non trading Income

A

Dividends, Receivables, Sale of assets, Interest, Lease premium

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4
Q

Lease premium calculations

A

2% * (years - 1) * lease

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5
Q

Main pool wda

A

18%

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6
Q

special rate pool wda

A

8%

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7
Q

annual investment allowance

A

first 200,000 is exempt

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8
Q

cars > 130

A

special rate pool

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9
Q

cars < 75

A

additions

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10
Q

first year allowance

A

100% on cars < 75 and unused cars and machinery

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11
Q

plant and machinery

A

office equipment, and furniture

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12
Q

trading stock

A
  • 20/80
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13
Q

corporation tax rates

A

15-16 : 20%
17-19 : 19%
20 onwards : 17%

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14
Q

Potentially Exempt Transfer

A

a lifetime transfer made to individual, bereaved minor, disabled person. Aren’t charger to IHT but charged if death occurs within 7 years.

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15
Q

Chargeable Life Transfer

A

chargeable on gross value of transfer. first 325000 is 0% excess is 20%. must be grossed up if the transferor pays tax.

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16
Q

Annual Exemption

A

occurs after all other exemptions claimed, first £3000 in any tax year. can be reused from previous ONE tax year.

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17
Q

Marriage Exemption

A

£5000 from parent
£2500 from ancestor / bride & groom
£1000 otherwise

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18
Q

Small Gift Exemption

A

£250 or less

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19
Q

Taper relief

A 
3yrs < 0%
3-4 20%
4-5 40%
5-6 60%
6-7 80%
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20
Q

main residence nil rate band

A

lower of property value or 100,000 - anything over is 40%

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21
Q

shares given to spouses

A

are exempt from CGT

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22
Q

chattels < 600

A

are exempt from CGT

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23
Q

chattels chargeable gains

A

are lower of sales - cost OR 5/3 (sales-6000)

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24
Q

gifted shares sales proceeds

A

lower + 0.5 (higher - lower)

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25
cost of shares
price of shares * shares sold/shares owned
26
PPR
whole gain * length of residence/length of ownership
27
letting relief is
40,000
28
PPR working uk
is 4 years allowed, anymore and only last 18 months count
29
PPR working abroad
any length is allowed
30
part disposal
purchase * sales / sales + MV of unsold
31
house and cottage exemption
£11,300
32
House CGT percentage
28% and 18%
33
CGT percentage
20% and 10%
34
allowable CGT losses
40,000
35
CGT gilts and qualifying corporate bonds
are exempt
36
CGT is payable
the January of the following year
37
tax planning objectives
reduce taxable income, lower tax rate and defer the date on tax payable
38
What is tax planning ? (3)
identification of problem, identification of relevant parts, application of tax rules, evaluation of options to minimise tax and identification of other factors.
39
tax planning summary for individuals, employed/self-employed
claim expenses, capital allowance and company pension plan, car fuel benefit and cap exp
40
self employed
pay tax later, wider range of deductions and lower NIC
41
as sole trader
no NIC for companies and flexibility regarding distribution
42
capital gain tax
interspouse transfers to minimise CGT and maximise use of annual exemption
43
inheritance tax
maximise use of general exemption, lifetime gifts, marriage exemption
44
VAT
payment of private fuel, voluntary registration to claim input tax
45
companies
pay CT on profits
46
shareholder
no NIC on dividends, first 5000 is 0% and after that is 7.5%
47
savings income
up to 5000 is 0%
48
class 2 NIC
self employed £2.85 * 52 weeks
49
class 4 NIC
Self employed percentage | 8164-45000 9% then 2%
50
Class 1 NIC
12% between 8164 and 45000 and 2% on excess
51
employer pays class 1 secondary
13.8% on income above 8164
52
main penalties in relation to VAT (6)
criminal fraud, failure to notify, incorrect VAT returns, default surcharge, VAT wrongdoing and breaches of regulation
53
criminal fraud
a person attempting to evade VAT may be imprisoned for up to 6 months or fined up to 5000
54
failure to notify
a taxable person who doesn't notify HMRC of their liability, is liable to a penalty
55
incorrect VAT returns
a taxable person who submits an incorrect VAT return is liable to a penalty of 30% to 100%
56
default surcharge
occurs if a taxable person submits a late VAT return. HMRC issues a late surcharge liability notice
57
VAT wrongdoing
if a person makes an unauthorised issue of a VAT invoice, amount varies from 30% to 100%
58
breaches of regulation
a taxable person who fails to comply with regulation will receive a written warning and then £5 per day for 1st offence and £10 per day for 2nd offence.
59
main features of cash accounting scheme
allows a registered person to delay the payment until its been received (if taxable turnover exceeds £1.6milli then they must withdraw)
60
a person may join cash accounting if
taxable turnover doesnt exceed £1.35 milli, VAT returns upto date, all amounts paid for, person hasnt been convicted of a VAT offence
61
main features of annual accounting scheme
during the year 9 payments of 10% of previous years VAT made and at the end the final payment is the rest of the VAT liability
62
a person may join annual accounting if
taxable turnover doesnt exceed £1.35 milli and they must withdraw if turnover exceeds £1.6 milli
63
taxable person for VAT purposes
The term person can refer to an individual, partnership or company or charity. A taxable person is a person making taxable supplies who is or should be registered for VAT
64
A person may join the flat rate scheme if
taxable turnover doesnt exceed 150,000 and FRS must be left if it exceeds 230,000q
65
main features of flat rate scheme
for small businesses to calculate VAT as a flat rate percentage. output is charged at normal rate, % depends on sector from 4 to 14.5
66
VAT registration is compulsory if
a persons taxable turnover exceeds 82000. online registration is available. a person failing to register but is liable is still a taxable person
67
voluntary registration
enables the person to recover input tax but costs of registering may outweigh.
68
personal allowance below £100,000
£11,500
69
Personal Allowance above £100,000
is 11500-0.5*(NSI-100,000)
70
Personal Savings Allowance
BR - £1,000, HR - £500, AR - £nil
71
Dividend Tax
5000 exempt, 33500, 150,000 and over

TAXATION (2 decks)

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