POT - principles Of Tax Flashcards
(21 cards)
Is NS&I Direct Saver Account and Investment Account exempt from tax?
No -‘it’s gross so it’s taxable as-is
Is income from government securities (government stock, bond, gilt, war loan) gross or exempt?
Gross. Tax it
What interest is received gross without deduction of tax at source?
Interest on loan between friends
Is Interest on National Savings Certificate exempt? NSC
Yes
NSC = yes
NS&I = no
Is income from NISAs (and Junior ISAS) exempt?
Yup
Is income from betting, competition, lottery and premium bond winnings exempt?
Yes
Which social security benefits are exempt from tax?
Housing and child benefit
Are scholarships taxable or exempt ?
They are exempt home girl
What type of income should be deducted from trading profits? Provide 3 examples
Non-trade income
- rental income
- profits on disposal of fixed assets
- investment income
What happens with goods taken for your own use?
Income must reflect normal sales price ie market value
If it’s been included in drawings at cost, add in the difference ie profit
Taxable benefits
How do you know if living accommodation is exempt ?
Needs to either be
Necessary eg school caretaker
Customary eg vicar
Security eg prime minister
What is the formula for taxing living accommodation (benefits)?
If houses’ original cost is more than 75000
3% x (cost - 75000)
Cost = original cost and capital improvements
ALSO ALWAYS DEDUCT EMPLOYEE CONTRIBUTION BESIDES PRIVATE FUEL
When do you use market value for living accommodation?
When there’s 6 years difference between when it’s acquired and when the employee moves in
What does the list price include for cars? (P11D employees only)
What does private use include?
Optional accessories provided with car
Further accessories bought later of £100 or more
Private use includes home to work
What is the tax for assets used for private use?
Higher of 20% x MV (annual value)
Rent paid by employer for asset, if applicable
Leasing a car of 130g/km emissions
Flat rate disallowance = 15% x hire charge
What is the difference between tax evasion and avoidance?
Tax evasion - misleading HMRC and money laundering
Tax avoidance - legally reducing tax burden. Intro of a general anti-abuse rule (GAAR) where HMRC can challenge tax avoidance measures
When do you use market value of asset for acquisition and disposal?
MV for asset if sole trader/partner brings an asset into business
MV if asset is given away
What capital allowances are time apportioned and what are not?
NOT
FYA
ARE - PRO RATA ON ACCOUNTING PERIOD
AIA 100% 500,000 pa
Small pool limit 1000 pa (write off balance if TWDV is that low)
WDA
Does it matter when the asset was bought? For capital allowances
No. Time doesn’t affect capital allowances
What allowances does cars get?
CARS DONT GET AIA ONLY FYA (if money spent and cars under certain emissions) and WDA
