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77 Cards in this Set
- Front
- Back
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Income tax pro forma (photo) |
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Basis of assessment |
20% up to basic rate £37500 40% up to higher £150000 45% after |
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Property income assessment threshold for cash basis |
£150,000 |
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Allowable deductions examples |
Insurance Finance costs of non res property Legal and professional Rate and tax paid by landlord Ancillary services provided by landlord Repairs and maintenance Fixed rate deductions for motor vehicles used in property business |
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Capital allowances |
Available only on p+m replacement furniture. Offset of proceeds of original asset Also claimed for motor vehicles used in the property business |
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How is property income loss shown in IT Comp and how it's carried forward |
Nil Carried forward against first available future income from property |
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Rent a room relief |
If taxpayer has lodger renting a furnished room in their main residence and gross income is not more than the rent a room limit the property income is exempt |
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Rent a room limit |
£7500 pa calculated on cash or accrual basis |
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How to deal with it if gross income is more than the limit. |
Lower of rent a room relief or normal calculation |
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Rent a room relief with 2 or more people |
£3750 |
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Characteristics of OPS (Occupational pension scheme) |
Set up by employer for benefit of employees. Can be made by employee and er Can be either money purchase pension schemes Defined benefit schemes |
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Characteristics of PPS (Personal pension scheme) |
Run by financial institution such as insurance company or bank Can be made by individual or any 3rd party on individual behalf eg employer or spouse Usually money purchase schemes |
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How do pps affect net income |
Pps contributions deducted from net income when calculating adjusted net income |
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Pension scheme contributions made by the emoyer |
An exempt benefit for employee An allowable trading expense for employer. On paid basis |
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Maximum gross pension that attracts relief |
Higher of 100% x relevant earnings Or £3600 |
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Annual allowance |
Annual allowance is £40,000 can be carried forward for 3 years and used on fifa basis after current year allowance has been used |
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Annual allowance charge |
Removes relief given on excess contributions |
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Lifetime allowance amount |
Lifetime allowance is £1,073,100 |
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Drawing a pension |
Tax free lump is capped at 25% of lower of: Value of the fund Lifetime allowance. Excess taken at either 55% or 25% depending on how it's taken |
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Adjustments to profit pro forma |
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General rule for expenditure to be allowable |
Wholly and exclusively for trading purposes |
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Examples of disallawable expenditure |
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Further examples of disallowed expenses |
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Co2 emissions |
In excess of 110g/km disallowance= 15% x hire charge. Allowable if below |
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Expenditure incurred before trade commenced if |
If it would have been deductible if already trading Incurred within 7 years before trade commenced |
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mileage |
45p per mile for first 10000 miles 25p after 24p per mile for a motor cycle 20p for cycle |
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One short period of account |
Tax the 12 months to the new accounting date |
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One long period of account |
End of last basis period to new accounting date. Reduce to 12 months by relieving opening year overlap profits |
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Conditions for a change of accounting date |
Hmrc will always accept change in accounting date in first 3 years Must notify on or before 31 January foowing tax year in which change is to be made First accounts to new date can't exceed 18 months Can't have been changed in previous 5 years |
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Plant |
Thermal insulation Building alterations incidental to insulation of p+m License to use computer software Fire safety equipment Other examples but main ones |
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Balancing allowance |
Write off if cdv below 1k |
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New low emissions cars |
Below 50 g/km co2 can qualify for 100% |
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Long life assets |
25 years + Can't be cars ships p+m used in retail shops showrooms office hotels or houses |
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AIA |
1m 200k after start of 2022 |
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Items sold in main or special rate pool |
Lower of Proceeds or original costs |
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Single asset pool |
Separate column in cap allowances computation. Private use assets Short life assets |
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Cessation |
Balancing adjustment to each pool to bring carried value to nil |
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Structures and buildings allowance |
Was 2% until April 2020 now 3% Claimed when it is brought into use and time apportioned |
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Notional loss |
When partner makes a loss but partnership makes profit. Partner with a loss deemed to have no taxable trading income |
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Notional profit |
If partnership makes a loss but profit allocation gives one partner a profit. Notional profit redistributed to remaining partners |
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Passenger payment rate |
5p per passenger mile |
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Examples of exempt benfits |
Max 8k removal expenses Annual social events of £150 per head per year |
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Trivial benefit |
Cost of benefit below £50 Annual cap of £300 |
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Living accommodation if employer owns property |
Rateable value And Extra charge only if original cost of house plus capital improvements before start of tax year >£75000 |
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Uk Domiciled |
Chargeable on worldwide assets |
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Non UK domicile |
Chargeable on UK assets only |
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Iht pro forma |
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Small gifts exemption |
Lifetime transfers exempt if they don't exceed £250 per recipient per tax year. Cannot exempt part of a larger gift |
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Marriage/civil partnership exemption |
Parent 5k Grandparent £2.5k Party to marriage or civil partnership £2.5k Anyone else £1k This exemption can exempt part of a larger gift |
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Annual exemption |
First 3k gifted each year not covered by other exemptions or reliefs is exempt. Unused AE can be carried forward one year but current year AE is offset first |
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General exemptions |
Following transfers whether made in life or death are exempt Charity Political Donors spouse ND Spouse - max 325000 |
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2 types of lifetime transfer |
Transfer of or a transfer to a discretionary trust. Non qualifying interest in possession trust on after 22 March 2006 |
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When is IHT chargeable on a CLT |
At time of gift Time of death if CLT was made in the seven years prior to the death |
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Potentially exempt transfers |
Transfers to individuals (other than spouse) Transfers to an ILP trust before 22 March 2006 Transfers to a qualifying to a qualifying ILP Trust on/after 22 March 2006. IHT is chargeable on a PET only if it is made in the seven years prior to death |
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Calculating lifetime tax |
Nil rate band is amount of chargeable transfers which can be made 7 years before death |
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Nil rate band |
325000 since 2009/2010 |
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Lifetime tax rate |
Trustees pay the tax 20% Donor pays the tax 25% |
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Gross chargeable transfers |
If trustees pays it is considered gross If donor pays the tax it is considered net of tax so GCT is the chargeable amount plus any lifetime tax paid by the donor |
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Death tax |
Death tax is due on any lifetime transfers within seven years of donors death as well as on death estate. Recipient liable for death tax |
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Taper relief on death tax |
3-4 years 80% 4-5 years 60% 5-6 years 40% 6-7 years 20% |
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Fall in value relief |
Transferee still owns asset received but the MV on death is below MV at date of transfer or Sold before death of donors but mv at sale below MV at date of transfer |
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Specific examples of plant |
Thermal insulation of a building Building alterations incidental to installation License to use computer equipment Fire safety equipment |
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Special rate pool items |
Long life assets Integral features Thermal insulation Solar panels High emission cars more than 110 g/km |
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Wda for small pools allowance |
If less than £1000 pa |
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Long life assets |
Expected working life of at least 25 years and over £100,000 |
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Aia |
£1,000,000 from 19/22 200000 before and after |
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Short life assets |
No more than 8 years if more transferred to main pool |
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Structures and building allowance |
Straight line 2% to 6th April now 3% Not available on residential or dwellings. Only claimed when brought in to use |
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Opening year basis partnership |
Use accrual basis on first year of trade |
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Allowance deduction |
If employee obliged to incur and pay expense. Expense wholly exclusively and necessarily in performance of duties of employment |
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Examples of deductible expenses |
Professional subscription fees Proportion of expenses if working from home Necessary tools Employees cash contributions into occupational pension scheme |
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Mileage allowance |
45p first 10000 25p thereafter 5p per passenger 24p motorcycle 20p cycle |
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Exempt benefits |
Living accommodation- no benefit if job related Work buses and subsidiaries to public bus services Loans under 10k pa £5 per night staying away £10 if abroad Mobile phone Recommended health treatments up to £500 per employee |
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Fuel benefit |
Co2 emissions as Car benefit x 24500 |
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Van benefit |
Van benefit is £3490 or £2792 if zero emission |
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Van fuel benefit |
The van fuel benefit is £666 |
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Employment related loans |
Average of loan outstanding at beginning and end of tax year. Strict method Monthly benefit on balance outstanding at end of each month |
