Seminar 4: Self Employment Trading Income

Question 1

Trade

Answer 1

any venture of in the nature of trade

Question 2

What is used to indicate trade

Answer 2

badges of trade

Question 3

10 badges of trade

Answer 3

1. subject matter of transaction
2. length of period of ownership
3. frequency of transactions
4. supplementary work
5. reasons for sale
6. profit motive
7. method og acquisition
8. way sale is carried out
9. existence of similar transactions
10. source of finance

Question 4

What happens to disallowed expenses

Answer 4

added back

Question 5

Trading allowance

Answer 5

£1000 per year

Question 6

When trading receipt is less than £1000

Answer 6

exempt

Question 7

When trading receipts are more than £1000

Answer 7

use:
- trading income - expenses
- trading income - £1000

Question 8

When is expenditure deductible

Answer 8

when it is related to running of trade exclusively

Question 9

Capital expenditure bringing enduring benefits to business, Allowed or disallowed?

Answer 9

disallowed

Question 10

Legal or professional charged on acquiring NCA, Allowed or disallowed?

Answer 10

disallowed

Question 11

Depreciation and amortisation, Allowed or disallowed?

Answer 11

disallowed

Question 12

Repairs to new NCA if it puts the asset into usable condition, Allowed or disallowed

Answer 12

disallowed

Question 13

Appropriations of profit, Allowed or disallowed

Answer 13

disallowed

Question 14

Owners drawings or salary shown in expenses, Allowed or disallowed

Answer 14

disallowed

Question 15

Personal tax and NIC, Allowed or disallowed

Answer 15

disallowed

Question 16

Unreasonable payment of salary to family members, Allowed or disallowed

Answer 16

disallowed

Question 17

Customer entertainment costs, Allowed or disallowed

Answer 17

disallowed

Question 18

Staff entertaining costs, Allowed or disallowed

Answer 18

allowed

Question 19

Gifts to employees, Allowed or disallowed

Answer 19

allowed

Question 20

Gifts to customers, Allowed or disallowed

Answer 20

disallowed unless it meets three specific requirements

Question 21

What are the three requirements for a customer gift to be allowed

Answer 21

1. no more than £50 per customer
2. are not food, drink or tobacco
3. must display logo or form of advertisement

Question 22

Increases in general provisions for bad debts / stock, Allowed or disallowed

Answer 22

disallowed

Question 23

Specific provision, Allowed or disallowed

Answer 23

allowed

Question 24

Trade debts, Allowed or disallowed

Answer 24

allowed

Question 25

Non trade debts, Allowed or disallowed

Answer 25

disallowed

Question 26

Donations, Allowed or disallowed

Answer 26

disallowed

Question 27

Small donations to local charities, Allowed or disallowed

Answer 27

allowed

Question 28

Gift Aid donations, Allowed or disallowed

Answer 28

disallowed

Question 29

Gifts of stock or machinery, Allowed or disallowed

Answer 29

allowed

Question 30

Political donations, Allowed or disallowed

Answer 30

disallowed

Question 31

Subscriptions to trade professional bodies, Allowed or disallowed

Answer 31

allowed

Question 32

Fines and penalties, Allowed or disallowed

Answer 32

disallowed

Question 33

Parking fines incurred on business activity, Allowed or disallowed

Answer 33

allowed

Question 34

Fees relating to income, Allowed or disallowed

Answer 34

allowed

Question 35

Professional fees dealing with HMRC, Allowed or disallowed

Answer 35

disallowed

Question 36

Fees relating to capital expenditure, Allowed or disallowed

Answer 36

disallowed

Question 37

Legal costs of renewing short lease less than 50 years, Allowed or disallowed

Answer 37

allowed

Question 38

Costs of registering patents or copyright for trade, Allowable or disallowable

Answer 38

allowable

Question 39

Redundancy payments, Allowable or disallowable

Answer 39

allowable

Question 40

Educational courses, Allowable or disallowable

Answer 40

allowable

Question 41

Pension contributions paid by employers, Allowed or disallowed

Answer 41

allowed, not any accruals

Question 42

What is the disallowance for polluting cars

Answer 42

15%

Question 43

Interest payable, Allowable or disallowable

Answer 43

Allowable

Question 44

Non recoverable VAT, Allowable or disallowable

Answer 44

Allowable

Question 45

Patent royalties, Allowed or disallowed

Answer 45

allowed

Question 46

Pre trading expenditure, Allowed or disallowed

Answer 46

allowed if incurred in 7 years before starting trade