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Flashcards in Taxation Exam Deck (71):
1

Tax adjusted profit

operating profit
add disallowed expenditure
less non trading income
Capital allowance
TTP

2

Disallowed expenditure

Drawings, Cap Exp, Depreciation, Legal fees, Repairs to new, Motor, Telephone, Bad Debt provisions, GAD, Trading stock (20/80)

3

Non trading Income

Dividends, Receivables, Sale of assets, Interest, Lease premium

4

Lease premium calculations

2% * (years - 1) * lease

5

Main pool wda

18%

6

special rate pool wda

8%

7

annual investment allowance

first 200,000 is exempt

8

cars > 130

special rate pool

9

cars < 75

additions

10

first year allowance

100% on cars < 75 and unused cars and machinery

11

plant and machinery

office equipment, and furniture

12

trading stock

* 20/80

13

corporation tax rates

15-16 : 20%
17-19 : 19%
20 onwards : 17%

14

Potentially Exempt Transfer

a lifetime transfer made to individual, bereaved minor, disabled person. Aren't charger to IHT but charged if death occurs within 7 years.

15

Chargeable Life Transfer

chargeable on gross value of transfer. first 325000 is 0% excess is 20%. must be grossed up if the transferor pays tax.

16

Annual Exemption

occurs after all other exemptions claimed, first £3000 in any tax year. can be reused from previous ONE tax year.

17

Marriage Exemption

£5000 from parent
£2500 from ancestor / bride & groom
£1000 otherwise

18

Small Gift Exemption

£250 or less

19

Taper relief

3yrs < 0%
3-4 20%
4-5 40%
5-6 60%
6-7 80%

20

main residence nil rate band

lower of property value or 100,000 - anything over is 40%

21

shares given to spouses

are exempt from CGT

22

chattels < 600

are exempt from CGT

23

chattels chargeable gains

are lower of sales - cost OR 5/3 (sales-6000)

24

gifted shares sales proceeds

lower + 0.5 (higher - lower)

25

cost of shares

price of shares * shares sold/shares owned

26

PPR

whole gain * length of residence/length of ownership

27

letting relief is

40,000

28

PPR working uk

is 4 years allowed, anymore and only last 18 months count

29

PPR working abroad

any length is allowed

30

part disposal

purchase * sales / sales + MV of unsold

31

house and cottage exemption

£11,300

32

House CGT percentage

28% and 18%

33

CGT percentage

20% and 10%

34

allowable CGT losses

40,000

35

CGT gilts and qualifying corporate bonds

are exempt

36

CGT is payable

the January of the following year

37

tax planning objectives

reduce taxable income, lower tax rate and defer the date on tax payable

38

What is tax planning ? (3)

identification of problem, identification of relevant parts, application of tax rules, evaluation of options to minimise tax and identification of other factors.

39

tax planning summary for individuals, employed/self-employed

claim expenses, capital allowance and company pension plan, car fuel benefit and cap exp

40

self employed

pay tax later, wider range of deductions and lower NIC

41

as sole trader

no NIC for companies and flexibility regarding distribution

42

capital gain tax

interspouse transfers to minimise CGT and maximise use of annual exemption

43

inheritance tax

maximise use of general exemption, lifetime gifts, marriage exemption

44

VAT

payment of private fuel, voluntary registration to claim input tax

45

companies

pay CT on profits

46

shareholder

no NIC on dividends, first 5000 is 0% and after that is 7.5%

47

savings income

up to 5000 is 0%

48

class 2 NIC

self employed £2.85 * 52 weeks

49

class 4 NIC

Self employed percentage
8164-45000 9% then 2%

50

Class 1 NIC

12% between 8164 and 45000 and 2% on excess

51

employer pays class 1 secondary

13.8% on income above 8164

52

main penalties in relation to VAT (6)

criminal fraud, failure to notify, incorrect VAT returns, default surcharge, VAT wrongdoing and breaches of regulation

53

criminal fraud

a person attempting to evade VAT may be imprisoned for up to 6 months or fined up to 5000

54

failure to notify

a taxable person who doesn't notify HMRC of their liability, is liable to a penalty

55

incorrect VAT returns

a taxable person who submits an incorrect VAT return is liable to a penalty of 30% to 100%

56

default surcharge

occurs if a taxable person submits a late VAT return. HMRC issues a late surcharge liability notice

57

VAT wrongdoing

if a person makes an unauthorised issue of a VAT invoice, amount varies from 30% to 100%

58

breaches of regulation

a taxable person who fails to comply with regulation will receive a written warning and then £5 per day for 1st offence and £10 per day for 2nd offence.

59

main features of cash accounting scheme

allows a registered person to delay the payment until its been received (if taxable turnover exceeds £1.6milli then they must withdraw)

60

a person may join cash accounting if

taxable turnover doesnt exceed £1.35 milli, VAT returns upto date, all amounts paid for, person hasnt been convicted of a VAT offence

61

main features of annual accounting scheme

during the year 9 payments of 10% of previous years VAT made and at the end the final payment is the rest of the VAT liability

62

a person may join annual accounting if

taxable turnover doesnt exceed £1.35 milli and they must withdraw if turnover exceeds £1.6 milli

63

taxable person for VAT purposes

The term person can refer to an individual, partnership or company or charity. A taxable person is a person making taxable supplies who is or should be registered for VAT

64

A person may join the flat rate scheme if

taxable turnover doesnt exceed 150,000 and FRS must be left if it exceeds 230,000q

65

main features of flat rate scheme

for small businesses to calculate VAT as a flat rate percentage. output is charged at normal rate, % depends on sector from 4 to 14.5

66

VAT registration is compulsory if

a persons taxable turnover exceeds 82000. online registration is available. a person failing to register but is liable is still a taxable person

67

voluntary registration

enables the person to recover input tax but costs of registering may outweigh.

68

personal allowance below £100,000

£11,500

69

Personal Allowance above £100,000

is 11500-0.5*(NSI-100,000)

70

Personal Savings Allowance

BR - £1,000, HR - £500, AR - £nil

71

Dividend Tax

5000 exempt, 33500, 150,000 and over