ACCA Tax UK

loss relief avialable

• against total income & chargeable gains of one or both of the previous 2 tax years
• terminal loss relief

terminal loss relief = available for businesses who suffer a loss in their final year of trade. it allows the carry back of losses to be set off against profit made in any of the previous 3 years on a LIFO basis

loss relief can't be claimed twice!

do a prior year & current year claim, regardless of any personal allowance wasted

check if any P.A is wasted or any nill rate bands can be used.

in these cases, carry forward where personal allowance would not be wasted might be more efficient

Separately

Capital Allowances are deducted BEFORE allocating profit.

The allocated profit should be the taxable trading profit

salaries & interest on capital contributions are an allocation of profit.

they are allocated as given in the exercise. the rest of the available profit will then be allocated based on the profit-sharing agreements

the profit to allocate is time apportioned for the respective period.

e.g. if Januar to July: share arrangement 1, Aug - Dez: share arrangement 2 -> time apportion profit for first and second period before then allocating accordingly.

same applies to number of partners

no they can be owned by the firm, or by the partners and used for business purposes

1. a loss is allocated the same way as profit
2. same loss relief as for sole traders is available
3. the partners can choose individually on how to use loss relief
4. new partners or new firm can claim opening year relief
5. leaving partners or ceasing firms can claim terminal loss relief

only for sole-traders & partnerships

it is only available with income <150'000

a business may continue to use the cash basis until income (recepits) grows

capital items (excl cars) can be treated as expenses - no capital allowances claimed. same applies for profit in relation to sale of capital items

For cars, flat rate expenses are claimed  (approved mileage allowance) - this is NOT adjusted for private/business use

• instead of C.A and running costs, a fixed rate expense can be claimed (approved mileage allowance)
• If fixed rate mileage is claimed for a van, its capital cost cannot be treated as a trading expense

a monthly flat rate can be deducted (relating to private use of utilities, phone, food etc):

350 for 1, 500 for 2, 650 for three and more

it is only available if BOTH partners are taxed @ basic rate

the market value at the time when the asset was first made available to ANY employee

for employees the receipt basis applies! = when you actually receive it, not when it was decided

1. annual charge = exempt
2. additional charge = exempt
3. ancillary expenses: max 10% of net emoluments (net emoluments = pay & benefits excl. accommodation)

1. annual charge
   1. rent to employer
   2. gross rateable value
2. additional charge
   1. owned <6 years: (cost-75'000)x rate of interest
   2. owned >6 years: (MV-75000)xrate of interest
   3. The cost of improvements made since acquisition but before the start of the current tax year is added to cost
   4. if the valuation was done after improvement, they are ignored as well
3. ancillary expenses

only if you are legally entitled to keep some of it at the end of the renting period

yes for 100%

the 150 limit only applies to tax benefit for employee

restricted to business use!

the loss is automatically carried forward

employment income

trading profit

property income from furnished holiday letting

net income

+ employers contribution to ANY pension

+ employees contribution to occ. pension scheme

• Sale or gift of chargeable asset
• loss or destruction of non-wasting asset
• receipt of capital sum (e.g. insurance comp.)

no, this is a no gian/loss transaction

only applies if they live together

• private residence (unless partially used for trade)
• qualifying corporate bonds
• government securities
• wasting chattles (unless plant & machinery with C.A)
• non-wasting chattles < 6000
• cars

• Land & buildings
• shares of companies
• goodwill
• high-value >6000, non-wasting, non-business chattles
• high-value busines plant & machinery (no loss can be established as cost has already attracted tax relief through CA)
• wasting assets OTHER than chattles (copyrights etc)

Sale consideration (proceeds)

- inicindental costs of sale (Cost necessary to get the asset sold)

= net consideration

-Allowable expenditure

Acquisition cost

enhancement expenditure

= chargeable gain/loss

no

current year losses must be set off against current year gains BEFORE AEA

unrelieved loss is carried forward & set off against future capital gains AFTER AEA

-> losses and AEA ashould ideally be used against the higher taxed category

A payment on account is necessary within 60 days of disposal.

For calculation, the following needs to be included:

• AEA, capital losses before disposal, capital losses c/fwd
• gains & losses incurred AFTER disposal are ignored
• this applies to only RESIDENTIAL PROPERTY, all other gains/losses are ignored

lower rate for Basic Rate taxpayers, higher rate for all others

if income <37700, then the available amount of the tax band (37700-income) is taxed at the lower rate and the rest at the higher rate