BLP TAX Flashcards
Corporation tax rates for 22/23 and 23/24?
19%
TTP > 250,000 = 25%
TTP 50,000 or less = 19%
In between - taper effect
What are the qualifying periods for rollover relief?
Bought in 12 months before and 3 years after
What are the key principles of rollover relief?
Can rollover chargeable gain as long as replacement asset is more expensive than original.
If new asset is cheaper than original then rollover relief will be reduced (e.g. 200,000 sale (with chargeable gain of £80,000) to buy land £180,000 = 80,000 - (200,000 - 180,000) = 60,000).
If new asset is so much cheaper that difference between old asset and new asset is greater than the chargeable gain - no rollover relief can be claimed e.g. sale 200,000 (chargeable gain 80,000), new asset £110,000 = 200,000 - 110,000 = 90,000 (>80,000)).
How can you offset trading losses (4 ways).
Trading losses can be offset against income and chargeable gains:
- In current year
- In previous year (as long as carrying on same trade in both years)
- Future years (up to £5mn in each accounting period (Deductions Allowance) - anything over this is up to 50% of profits)
- Group - one company in a group which makes a loss can surrender a loss to a profitable company in the group to offset losses.
When should claims be made when offsetting trading losses in current year or previous year? (what if company has ceased trading?
Within 2 years after end of accounting period in which loss arose
If a company ceases trading = any trading loss in final 12 months can be set off against profits made in 3 years prior to start of 12 months
When calculating taxable income profits, what can be deducted for tax purposes? What is it deducted from?
Wholly and exclusively for purposes of trade (expenditure partially by way of gift)
Not prohibited by statute (e.g. cannot deduct business entertainment expenditure + provisions made for doubtful debts)
Income nature - rent, interest paid, wages and repairs
Gross trading receipts
What are the most common forms of company income?
Rental, trading, interest + dividend
What are capital allowances deductible from?
Income receipts (even though they relate to capital expenditure)
Income profits = income receipts - deductible expenditure, capital allowances, trading losses
What can capital losses be offset against? How much? When should a claim be made?
Current and future chargeable gains (not previous). Up to Deductions Allowance (£5mn) + then max 50% after.
Within 4 years from end of accounting period.
How should tax be paid for companies with TTP X or less or more than X
(what figure is X as well)
1,500,000 or less = 9 months + 1 day of end of accounting period (with tax return filed within 12 months)
More than 1,500,000: 4 instalments over relevant accounting period and next
What is reduced rated VAT figure?
5%
If a business pays more than X mn to HMRC in VAT they must …
£2.3mn, must make monthly payments on account and then pay the balance when submitting the quarterly return
What businesses can make an annual VAT return if they opt to?
Annual turnover not exceeding £1,350,000
Who can opt into the flat rate scheme?
taxable annual turnover not exceeding £150,000 + total annual turnover not exceeding 230,000
What are the 4 types of VAT supply? What are the characteristics of each?
Standard rated (doesn’t come under exceptions below) - 20%
Reduced rated (5%) - domestic heating + power, installation of mobility aids, smoking cessation products, children’s car seats
Zero rated - food, sewerage, books/newspapers, new houses, public transport, children’s clothing (able to recover input from HMRC)
Exempt - insurance, finance, education/health services, sale of land and buildings (not able to recover input from HMRC)
