Trading Income Flashcards
(18 cards)
When closing stock is accounted for, we use the lower of the cost or…?
Market value.
When there are drawings of stock and the cost is accounted for, what do we add back?
The selling price.
When there are drawings of stock and the cost is not accounted for, what do we add back?
The profit.
What type of expenditure is not deductible from trading profits?
CAPITAL!!! YOU CLAIM CAPITAL ALLOWANCES ON IT!!!
Are legal fees on capital expenditure allowable?
NO!
Repairs are deductible, extensions are…?
Not deductible.
Are samples an allowable expense?
Yes.
Is any overseas tax added back to the foreign source of income?
Yes.
When are gifts to customers allowable?
- If it is less than £50 per gift - this doesn’t partially exempt the gift if over £50 per gift.
- It is not food, drink, tobacco or token/voucher exchangeable for goods.
- If it has the company’s brand.
In regards to PAYE settlement agreements, what does the employer pay?
- The benefit
- The tax on the benefit
- Class 1B NICs
What are allowable redundancy payments?
Statutory amount x number of employees
Loans relating to anything capital should be…?
Not included in the tax-adjusted trading profit computation.
How do you calculate the income tax liability on transitional profits?
- First calculate the income tax liability EXCLUDING transitional profits (A)
- Then calculate the income tax liability INCLUDING transitional profits (B)
- The difference between the two (B - A) is the income tax on transitional profits.
How are transitional profits spread?
- Spread over 5 years.
- Starting from the tax year 2023/24
- Unless a business elects to tax them in one year
If fixed rate deductions for cars are claimed instead of using running costs, what happens?
- Running costs is not included in tax-adjusted trading profit calculation.
- Instead, fixed rate deduction is.
- Vice versa if fixed rate deduction is not chosen then business portion of running costs of car are deducted.
Are speeding fines incurred by employees deductible from trading profits?
No.
Are parking fines incurred by employees deductible from trading profits.
Yes.
Are legal fees relating to short-term leases (less than 50 years) deductible?
Yes.
