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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
Q

cost of shares

A

price of shares * shares sold/shares owned

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26
Q

PPR

A

whole gain * length of residence/length of ownership

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27
Q

letting relief is

A

40,000

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28
Q

PPR working uk

A

is 4 years allowed, anymore and only last 18 months count

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29
Q

PPR working abroad

A

any length is allowed

30
Q

part disposal

A

purchase * sales / sales + MV of unsold

31
Q

house and cottage exemption

A

£11,300

32
Q

House CGT percentage

A

28% and 18%

33
Q

CGT percentage

A

20% and 10%

34
Q

allowable CGT losses

A

40,000

35
Q

CGT gilts and qualifying corporate bonds

A

are exempt

36
Q

CGT is payable

A

the January of the following year

37
Q

tax planning objectives

A

reduce taxable income, lower tax rate and defer the date on tax payable

38
Q

What is tax planning ? (3)

A

identification of problem, identification of relevant parts, application of tax rules, evaluation of options to minimise tax and identification of other factors.

39
Q

tax planning summary for individuals, employed/self-employed

A

claim expenses, capital allowance and company pension plan, car fuel benefit and cap exp

40
Q

self employed

A

pay tax later, wider range of deductions and lower NIC

41
Q

as sole trader

A

no NIC for companies and flexibility regarding distribution

42
Q

capital gain tax

A

interspouse transfers to minimise CGT and maximise use of annual exemption

43
Q

inheritance tax

A

maximise use of general exemption, lifetime gifts, marriage exemption

44
Q

VAT

A

payment of private fuel, voluntary registration to claim input tax

45
Q

companies

A

pay CT on profits

46
Q

shareholder

A

no NIC on dividends, first 5000 is 0% and after that is 7.5%

47
Q

savings income

A

up to 5000 is 0%

48
Q

class 2 NIC

A

self employed £2.85 * 52 weeks

49
Q

class 4 NIC

A

Self employed percentage

8164-45000 9% then 2%

50
Q

Class 1 NIC

A

12% between 8164 and 45000 and 2% on excess

51
Q

employer pays class 1 secondary

A

13.8% on income above 8164

52
Q

main penalties in relation to VAT (6)

A

criminal fraud, failure to notify, incorrect VAT returns, default surcharge, VAT wrongdoing and breaches of regulation

53
Q

criminal fraud

A

a person attempting to evade VAT may be imprisoned for up to 6 months or fined up to 5000

54
Q

failure to notify

A

a taxable person who doesn’t notify HMRC of their liability, is liable to a penalty

55
Q

incorrect VAT returns

A

a taxable person who submits an incorrect VAT return is liable to a penalty of 30% to 100%

56
Q

default surcharge

A

occurs if a taxable person submits a late VAT return. HMRC issues a late surcharge liability notice

57
Q

VAT wrongdoing

A

if a person makes an unauthorised issue of a VAT invoice, amount varies from 30% to 100%

58
Q

breaches of regulation

A

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
Q

main features of cash accounting scheme

A

allows a registered person to delay the payment until its been received (if taxable turnover exceeds £1.6milli then they must withdraw)

60
Q

a person may join cash accounting if

A

taxable turnover doesnt exceed £1.35 milli, VAT returns upto date, all amounts paid for, person hasnt been convicted of a VAT offence

61
Q

main features of annual accounting scheme

A

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
Q

a person may join annual accounting if

A

taxable turnover doesnt exceed £1.35 milli and they must withdraw if turnover exceeds £1.6 milli

63
Q

taxable person for VAT purposes

A

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
Q

A person may join the flat rate scheme if

A

taxable turnover doesnt exceed 150,000 and FRS must be left if it exceeds 230,000q

65
Q

main features of flat rate scheme

A

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
Q

VAT registration is compulsory if

A

a persons taxable turnover exceeds 82000. online registration is available. a person failing to register but is liable is still a taxable person

67
Q

voluntary registration

A

enables the person to recover input tax but costs of registering may outweigh.

68
Q

personal allowance below £100,000

A

£11,500

69
Q

Personal Allowance above £100,000

A

is 11500-0.5*(NSI-100,000)

70
Q

Personal Savings Allowance

A

BR - £1,000, HR - £500, AR - £nil

71
Q

Dividend Tax

A

5000 exempt, 33500, 150,000 and over

TAXATION (2 decks)

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