ACCA Tax UK

• if it was not considered a large company before
• if profits for relevant period are <10m

• <3m - 100 fixed (500 if third cons. filing late)
• 3-6m - 200 fixed (1000 if third cons. filing late)
• 6-12- 200 + 10% tax outstanding (1000 if third)
• >12 - 200 + 20% of tax outstanding (1000 if third)

3000

Within 4 years of end of relevant acc. period

1. tax return filed late
2. records are not kept long enough
3. company failed to inform HRMC of new source of income

Late payment = interest charges

Sole trader

• class 2 & 4 NIC
• income tax on tax adj. profits AFTER personal allowance

Director of LTD

• employee
• class 1 NIC
• income tax on salary & dividends

LTD

• employers NIC (1&1A)
• corporation tax
• employers NIC & salary are deductible expenses
• corporation tax rate = max 26.5%

Bonus vs dividends

• dividend tax rates = lower
• nil rate bands for dividends
• no NIC for dividendds

Other factors

• legal responsibilities
• administrative burden for corporation tax return
• no cash basis for LTD
• paperwork, board minutes

1. Amounts not taxable as trading income
   1. investment income
   2. non-taxable income (repayment of tax)
   3. capital profit on sale of assets
2. disallowable expenditure
   1. capital expenditure
   2. all expenditure not wholly & exclusively for trading purposes
   3. accounting estimates (depreciation/provisions)
   4. interest payable for loans on non-trading expenses
   5. qualifying charitbale donations

• Capital Allowances
• Income element of short-term lease (capital element = lease premium * 2% (n-1)

7 years

• no private use
• all allowances EXCEPT FYA are pro-rated for short acc. periods
• CA can never be assessed for a period >12m

• 130% superdeduction - the sale proceeds are NOT deducted from the main pool, INSTEAD they are brought in as a balancing CHARGE (=less allowances, more tax)
• 50% FYA - 50% of sale is deducted from special rate pool, 50% is brought in as a balancing CHARGE

Rent accrued

Income element of short-term lease

(allowable expense)

= Property income

• no approved mileage rates possible
• replacement furniture relief for domestic items in residential property
• loan interest payable is treated under the loan relation ship rules and deducted from non-trade interest receivable by the company

• adjusted trading profits - time apportion
• capital allowances - separate computation
• property business profit - time apportion
• non-trade interest - accruals
• chargeable gains - date of disposal
• donations - date of payment
• dividends - date of payment
• miscellaneous income - time apportion

All income/profit is apportioned, CA are separately calculated to apportion the allowance limits. rest: payment date

• No AEA for Ltd
• For Ltd: Indexation allowance of COST

• NEVER carried back
• NEVER set off against total income
• carried FORWARD or set off against CURRENT gains
• unused losses must be used against first available gains
• automatic claim

CY Chargeable gains

(CY losses)

(b/fwd losses)

= taxable amount

1. Same day
2. PREVIOUS 9 days
3. indexed pool of shares
   1. cost & indexed cost are recorded separately!
   2. whem shares are sold, cost & indexed cost are deducted proportionally
      1. Proceeds - Cost - Indexation allowance = gain/loss

• if old & new assets are qualifying
  • land & building
  • fixed plant & machinery
• both assets must be used in the trade
• reinvest between 12m before and 3y after disposal

always BEFORE deduction of qualifying charitbale donations

• set off against total profits before donations of current period
• NO restriction of claim/loss - ALL OR NOTHING

• only possible AFTER CY loss relief
• any loss remaining is sett off against total profits BEFORE donations
• offset only for pior 12 months!! if different acc. periods, this needs to be considered

• set off against total profit before donations
• partial claim is possible!!!
• NO CY/Pior year claim necessary!!

• same as for individuals
• losses that arise in the last 12m of trading can be releliefed against the last 36months preceding the last accounting period
• LIFO

1. set off against total profits of SAME period
2. set off against total profits of FUTURE periods
3. NEVER carried back
4. property business losses are set off first, compared to trading losses
5. partial claims are allowed

1. Relieved against CURRENT CHARGEABLE GAINS
2. Relieved against future CHARGEABLE GAINS
3. NEVER carried back
4. NEVER set off against total income
5. NO partial claims

1. loss relief group-wide for a 75-group
2. gains-group (50) - taxation of chargeable gains may be reduced and capital loss relief made easier (capital loss can't be group relieved)

• a parent company with its 75% subsidiaries (75% holding directly or indirectly)
• the companies can be UK resident or international
• only UK resident companies qualify for loss relief

• relief can be done against profits of one or more claimant companies
• it does not matter who is parent/subs.
• ANY company with loss can be the surrendering company
• ANY amount of CY loss can be surrendered, the company does NOT have to use the loss itself first
• brought forward losses can only be surrendered if the respective company is UNABLE to use the loss
• the max group relief available is equal to their TTP, assuming their wn losses are set off first

1. current period trading losses
2. brought forward trading losses, provided they cannot use them themselves
3. UNRELIEVED current period property business losses
4. brought forward trading losses, provided they cannot use them themselves
5. UNRELIEVED qualifying charitable donations

• CY & PY losses for simple relief CAN'T be restricted, where Group relief CAN be restricted
•  

Relief is only available for the corresponding acc. period

Loss & profit therefore have to be calculated accordingly

Gains group = parent with 75% subsidiaries, this also includes subsidiaries with a >50% effective interest

a company can only be in ONE gains group but in multiple group relief groups (both at the same time possible as well)

• no gains/loss transfer for intra-group asset transfer
• proceeds are deemed to equal cost + indexation