F6 Revision Income Tax Computation

8/8/2019 F6 Revision Income Tax Computation

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1PAPER F6

DECEMBER 2009 REVISION COURSE

IncomE TAx comPuTATIon

Mr. A

Tax Year 2008/09

Non Savings Savings Dividends

Trading Income W

Employment Income W4

Property Income W5

Bank Interest × 100⁄8

Building society Interest × 100⁄8

Other Interest received gross

Dividends × 100⁄

Total Income

Less: Reliefs

Qualifying interest

Loss Reliefs

Net Income

Less Personal Allowance (Note 1) (6,35)

Taxable Income

Note 1

PAA 65 + 9,3

75 + 9,

Abated if Net income > £2,



2PAPER F6


TAx cAlculATIon

Non Savings

34, @ 2% (Note 2)

>34, @ 4%

Savings (Note 3)

(After Non savings)

34, @ 2%

>34, @ 4%

Dividends

(After Non Savings & Savings)

34, @ %

>34, @ 32 ½%

Add

Income tax @ 4% on excess pension contributions

Less Tax deducted @ source

Dividends

Bank Interest

Building society interest

PAYE

Tax Payable / (Repayable)

Note 2Extend Basic rate band by gross contributions to charity under the Gift Aid scheme and gross contributions to a

private pension scheme.

Note 3

A special starting rate of % applies on savings income only, if taxable non-savings income < £2,32



3PAPER F6


TAx cAlculATIon

W1 Trading Income

Adjusted Prot W2

Less Capital allowances W3

Trading Income

W2 Adjusted proft

Net Prot per Accounts

Add back Expenses Disallowed for tax

Deduct Income assessed elsewhere or not taxedAdjusted prot

W3 Capital Allowances

% = business

useGeneral Pool Special rate

Pool

Expensive car Private use

Asset

Short life asset Allowances

WDV b/f

Additions qualifying for AIA/FYA

- long life assets

- integral features of a building

- thermal insulation on a business building[MAXIMUM £5, p.a] - Balance goes into

special rate pool

- Plant & machinery (Balance of the maxi-

mum £5, p.a. if not on above)

Balance goes into general poolOther additions not qualifying for AIA/FYA

Cars

Disposals

WDA @ 2%

WDA @ %

WDA restricted (3, pa)

Balancing (allowance) / charge

Additions qualifying for FYA @ %

Low emmision cars

WDV c/f

Assess using Current Year

Basis / opening year rules /

change of accounting yearrules / closing year rules



4PAPER F6


TAx cAlculATIon

W4 Employment Income

Salary

Bonus

Benets

Expense Payments

less

Allowable Deductions

Employment Income

W5 Property Income

Rental Income accruing X

Less: Allowable expenses (X)

Wear & tear allowance for furnished property (X)

Property Income in the year X

Less: Property losses b/f (X)

Property Income assessed X

Note:

(a) Property may be classied as furnished holiday letting

(b) If a lodger in main residence :

Lower of:

• normal calculation (above) or

• Rental Income X

Less: rent a room relief (4,25)

Property Income (X)



5PAPER F6


cAPITAl GAIns TAx - IndIvIduAls

1 Basic computation

Disposal proceeds X

Less: incidental costs of disposal (X)

Net proceeds X

Less: Acquisition costs (X)

Enhancement expenditure (X)

Capital Gain X

Less reliefs (X)

Revised Capital gain X

Note:

Special rules for share disposals, part disposals, chattels, damaged and destroyed assets.

Gain may be reduced by Entrepreneurs’, Rollover, Holdover, Gift, Incorporation or Principle Private Residence

Relief

3 Capital Losses

Disposal proceeds X

Less: incidental costs of disposal (X)

Net proceeds X

Less: Acquisition costs (X)

Enhancement expenditure (X)

Capital loss (X)

4 Summary

Revised Capital Gains in the year X

Less: Capital Losses in the year (X)

Net Capital Gains in the year X

Less: Capital losses brought forward (X)

Net Capital Gains X

Less: Annual Exemption (9,6)

Taxable Gains X

CGT @ % X

Due 3//



6PAPER F6


coRPoRATIon TAx comPuTATIon

ABC Limited

Accounting period ending…

Trading Income W

Interest Receivable W5

Property Income W6

Overseas Income W7

Chargeable Gains W

less

Gift Aid payments

PCTCT

Corporation Tax W9

Due Date

Filing Date



7PAPER F6



W1 Trading Income

Adjusted prot W2

less

Capital Allowances W3

Industrial Buildings allowances W4

Trading Income

W2 Adjusted Proft

Net Prot Before Taxation per Accounts

Add back Expenses Disallowed per tax

Deduct Income assessed elsewhere or not taxed

Adjusted Prot



8PAPER F6



W3 Capital Allowances

General Pool Special rate

Pool Expensive car Short life Assets Allowances

WDV b/f

Additions qualifying for AIA/FYA

- long life assets

- integral features of a building

- thermal insulation on a business building[MAXIMUM £5, p.a] - Balance goes into special

rate pool

- Plant & machinery (Balance of the maximum

£5, p.a. if not on above)Balance goes into general pool

Other additions not qualifying for AIA/FYA

Cars

Disposals

WDA @ 2%WDA @ %

WDA restricted (3, pa)

Balancing (allowance) / charge

Additions qualifying for FYA @ %

Low emmision cars

WDV c/f



9PAPER F6



W4 Industrial Buildings allowances

Full industrial use:

WDA = Cost x 3% p.a., if in industrial use on the last day of the accounting period

On Sale - No WDA or balancing adjustment in the accounting period of sale.

Non-industrial use

Notional allowance for accounting period where non-industrial use on last day of the accounting period

On Sale - No WDA or Balancing adjustment in the accounting period of sale



10PAPER F6



W5 Interest receivable

Interest receivable

less

Interest payable on non trading loans

W6 Property Income

Rental Income

less

Allowable Expenses

(including wear & tear for furnished property)

Also Premium on short lease (≤ 5 years)

Premium = term oflease×

−51

50

n

n

W7 Overseas Income

Oversees income grossed up for

– withholding tax

– underlying tax if ≥ % voting power

W8 Chargeable Gains

Disposal Proceeds

less incidental costs of disposal

Net Sales Proceeds

less

Acquisition costs

Enhancement Expenditure

Unindexed Gain

less Indexation allowance

Chargeable Gain

less reliefs

less Capital loss

Capital loss b/f

Net Chargeable Gains

(to go into the corporation tax computation)



11PAPER F6



Capital loss:

Disposal proceeds

less Incidental costs of disposal

less Acquisition costs

Enhancement Expenditure

Capital loss

Note: Special Rules for shares, chattels, part disposals, damaged & destroyed assets.

Gain may be reduced by Rollover or Holdover Relief



12PAPER F6



W9 Corporation Tax

“Prots” = PCTCT + FII

Financial Year

Limits

Compare “Prots” to limits W

Calculation of Tax

PCTCT × tax rate X

less Double tax relief

Lower of – UK tax (X)

– overseas tax

Corporation tax payable X

W10

2%

3,

2% less marginal relief

,5,

2%

margia reief

Fraction limit "Profits"PCTCT

"Profits"× −[ ]×

Documents

F6 Revision Income Tax Computation