Trading Income Flashcards
(17 cards)
Employment payments when allowed or not.
Allowed following accruals,
But if not paid within 9 months of year end then disallow and allow when paid.
Redundancy payments
Limit allowable expense to 3x statutory pay.
Leased cars
Disallow 15% if polluting only
Appropriations of profit
Disallow:
Owner salary
Drawings from company
Private use of expenses
Unreasonable payment to family members
General provisions vs specific provisions
Disallow general
Allow specific
Write off of non trade debts
Disallow expense
Interest on late payment of tax
Disallow
Gifts are disallowed except what
To employee
Samples to customers
Gifts to customers that have advertising, not FDT, not vouchers for goods, less than £50
Charitable donations
Only to small local charities are allowable expenses.
Legal fees
Disallow legal fees of capital nature.
If for trade then allow
Also allow:
Renewal of short term leave
Obtaining long term debt finance
Obtaining patent
Pension payments
Disallow accrued payments, only allowed on a paid basis.
Removed goods from business
If cost still in, then add back full selling price.
If cost has been removed then just add back the profit that would have been made.
What to do if the customer pays for something not in cash
Any non monetary consideration is taxable as trading income.
Add the money value of the non monetary consideration to the profit
Pre trading expenditure
7 years and would be allowed if incurred in trade.
Consider the effect of capital allowances.
Transition profits
Calculate twice, once without TP and then with. The difference is the tax on TP
Partnerships
Adjust profits (add/deduct)
Then capital allowances
Then distribute between partners
Tax each partner on their share
Taxing an LLP
The same except salaried member are treated as employees.
