EXAM Flashcards
NICS
check the AAT practice NICS questions carefully to make sure I do some same way in terms of method/rounding. Then write it down & read over so familiar
.Probably will be a case of
- Take the annual PT/UEL figs given in ref & break down into monthly/weekly (Osborne rounded up/down as per the decimal places)
- Then do either:
Lower rate taxpayer:
Salary -PT * 12%
Higher rate taxpayer (UEL is £50K p/a):
*UEL-PT * 12% weekly or monthly pay given.
Salary -UEL * 2%
Remember if earning above Lower Earnings Limit (£120 p/w not given in ref mat) but below PT they get credited with making contribs at 0% which counts towards State pension & other benefits.
Task 6
When doing the computation
Top section: Put £ in col 3 header
list the words Col1 , any workings col2, amount col3
In the calc bit.
Put the sum in col1 (eg £37,500 x 20%)
The working if appropriate col2
The amount col3
In AAT practice it says ‘Enter answer in whole pounds only.
NB: It rounded a tax due amount up (a .70)
so use proper rounding.
Found this
If the decimal portion is less than 0.5, we round down, if the decimal portion is more than 0.5, we round up, and if the decimal portion is exactly 0.5, we look at the place value to the left of the five (yes, really, the LEFT!). If it’s an odd number, you round up, and if it’s an even number, you round down
Task 6
Accoring to FI Yutube W2
Must put in ‘Personal allowance’ & ‘savings allowance’ lines even if zero (to show you know it)
Apparently there are marks for this
.Also she says
if asked for ‘Tax Liability’ it’s the Total tax due (before deducting any PAYE already paid)
The final figure is ‘Tax Payable’ (still due)
Also important not to confuse Total Income (before taking off PA) and ‘Taxable Income’ (after taking off PA)
As always RTFQ !!
examples of silly errors…
- ‘Calculate the income tax saving’ of swapping a car for one with same list price but different scale%…… I answered with the ‘saving’ in benefit amount instead of taking it a step further to the TAX saving of 20% of that amount.
Is a cousin a ‘connected person’ for CGT
NO!
Think up and down DIRECT line.
- Bro & Sis
- Children and their spouses
- Parents and their spouses.
- Grandparents and their spouses
(Also biz associates but won’t be in this exam)
Not:
- Uncles and aunts
- Cousins
- Nephews & Nieces
James made a loss selling a painting to his daughter.
He can only use this loss against gains made on disposal to his daughter - True or False?
True.
Gains/Losses to connected person can only be offset against gains losses to same person (Maybe look this up to clarify… FI youtube W3)
IHT tasks
Work through items chronologically
.
When doing a CGT calc involving buying and selling costs … what to remember that I do wrong?
Put both buying and selling costs in ‘costs’ along with purchase price
I tend to take selling cost off proceeds but this seems not to be the correct way to do it even though get the same answer.
Why would you pass as asset spouse to spouse when the cost base doesn’t reset?
To make use of lower band if spouse make the gain?
Gifts to connected / non connected people?
Always at market value.
But I think if sold to non-connected then proceeds are used even if above/below market value
What to remember about loss on disposal to connected person (presumably this is in the case where MV fig is used and there is still a loss)
Cannot be offset against general gains, only against gains made on other disposals to the same person.
If question says answer ‘in whole pounds’ this means ?
Round down
when limiting the loss for a chattel sold for less than £6K (that was bought for more than £6K) which figure o you change and what to?
Substitute the proceeds figure. (Selling price)
what to watch out for part sale where they give you eg ‘sold a third of the field’
Don’t fall in trap of doing 1/3 of purchase price.
Share matching
What are the rules?
- Shares bought same day as disposal matched with disposal
- Shares bought in 30 days after diposal matched with ones disposed (match with earliest first if more than on acquisition ie FIFO basis)
- Match wil pool (FA 1985 pool / motley fool calls it ‘section 104 holding’)
