TC Flashcards
Property allowance
If property income is £1,000 or less, it is exempt from income tax
Any greater and usual sum (income less expenses) is taxed
Rent a room relief
Accommodation let to tenant is part of taxpayer’s only or main residence
Up to £7,500 in rent is exempt from income tax each year
Personal pension contribution vs occupational pension contribution
Personal –> gross up contribution (if net) by multiplying by 100/80. Extend tax bands by that amount
Occupational –> give deduction from gross amount of pension contribution
Mileage rate scheme
Car or van = 45p per mile for first 10k miles, 25p per mile after
Trading allowance
Trading profits up to £1000 are not taxable
Can elect to deduct £1000 if expenses >£1,000
Basis rules - tax year 1
Date of commencement of trade to following 5th April
Basis rules - tax year 2
No AP ending in tax year 2 –> tax profits arising in tax year
AP ends in tax year 2 –> CYB (AP = 12 months); first 12 months trading (AP < 12 months); tax last 12 months of AP (AP > 12 months)
Single asset pools (CAs)
Each asset with partial private use kept in separate pools
Only business element receives CAs
CAs in year of cessation
Disposal proceeds of assets deducted from each pool, resulting in balancing allowances or balancing charges
Disposal value > TWDV = balancing charge
Disposal value < TWDV = balancing allowance
CGT - annual exempt amount
£12,300
CGT - Business Asset Disposal Relief
Qualifying disposals of business assets
Gains taxed at 10%
Taxed before other assets (ie. uses up BRB)
CGT - disposals between spouses
No gain/no loss
If sold outside marriage afterwards, cost is original cost to first spouse who gave it to their husband/wife
CGT - gifts of quoted shares value
Lower quoted price + 1/2 (higher quoted price - lower quoted price)
CGT - rollover relief
Proceeds of sale of QB assets used to purchase replacement QB assets
Must be acquired one year before or up to three years after sale
Gain = lower of: amount not reinvested and original gain
CGT - gift relief
Amount below MV that was paid for asset/shares
Gain restricted for shares –> (chargeable business assets/chargeable assets) x gain
CGT - investors relief
Charges CGT on qualifying disposals at 10%
Qualifying disposals = disposals of unquoted shares in company and held continually for 3+ years
CGT - private residence relief
(Actual deemed occupation (months)/ownership (months)) x net gain
CGT - letting relief
Let of part of property while still living there
Lower of: letting gain; PRR; £40,000
Remittance basis charges
£30k - resident in at least 7 of last 9 tax years
£60k - resident in at least 12 of last 14 tax years
Add after computing tax
Double Tax Relief (DTR)
Lower of: overseas tax suffered and UK tax on overseas income/gain
NICs - Apprenticeship levy
0.5% of annual pay bill
First £15,000 is tax free per year
IHT - marriage gift exemption
£5,000 parent
£2,500 remote ancestor or one of parties getting married
£1,000 in any other case
IHT - Residence nil rate band
Death estate includes home and is left to direct descendants
Value of £175,000 –> reduced by £1 for every £2 over £2 million
IHT - valuation of quoted shares
Lower of: quarter up rule –> lower quoted price + 1/4 (higher quoted price - lower quoted price)
Average of highest and lowest marked bargains on day of transfer
IHT - valuation of related property
Value of whole property x (Value of property transferred at unrelated value/value of property transferred at unrelated value + value of related property at unrelated value)
IHT - Quick Succession Relief
Tax paid on earlier transfer x (net transfer/gross transfer) x relevant %
Relevant % = 100% less than one year, reduces by 20% each year
IHT - Business Property Relief
50% relief –> quoted shares where donor had control; assets owned by donor and used in business they control
100% relief –> sole trader/partnership business transferred; shares in unquoted company
IHT - Taper relief
3-4 years after death = 80% death IHT chargeable
Reduces by 20% for each year until 7 years
CG for companies - Indexation allowance
Cost x (RPI in month of disposal - RPI in month of expenditure/ RPI in month of expenditure)
R&D for SMEs
Less than 500 employees and turnover less than 100m euros or total assets less than 86m euros
Usual 100% deduction for expenditure + 130% deduction
i.e. expenditure x 2.3 is deducted
R&D for large companies
RDEC credit of 13%
Add to total taxable profit
Deduct from CT LIABILITY!
Group relief
Lower of: maximum surrender by company A and maximum claim by company B
VAT - partial exemption test one
Total input VAT less than £625pm on average AND exempt supplies no more than 50% of total supplies
May recover input VAT on exempt supplies
VAT - partial exemption test two
Total input VAT - input tax directly on taxable supplies is less than £625 pm
AND Exempt supplies are no more than 50% of total supplies
VAT - capital goods scheme
Partially exempt supplies made - taxable % x input tax paid is recoverable
Changes in taxable % –> (Total input VAT/10 or 5 years) x (taxable % now - original taxable %)
Stamp Duty - paper based shares
- 5% of consideration paid, rounded up to nearest £5
e. g. £3433 x 0.005 = £17.17 –> round up to £20
Stamp Duty Reserve Tax
Paperless agreements
0.5% of consideration (no rounding)
Stamp Duty Land Tax - first time buyer
0% on first £300,000
5% on any excess up to £500,000
Normal rates if value exceeds £500,000
