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1、ACCAPaperF6Taxation(UK)TaughtCourseDecember2011ExamsTutorNameTutorTelephoneTutornamebppSlide 2Health&SafetyProceduresFirealarm=continuousbellFireExitsAssemblypointFirstaidSlide 3CourseAdministrationStartandfinishtimesBreaksDailyattendanceregisterSlide 4FacilitiesToiletsCanteen/commonroomDrinksmachin
2、esInternetfacilitiesAfterclassstudyroomSwitchoffMobilePhonesSlide 5PassAssuranceYoumust:Bookonbothataughtandrevisioncourse.Attendallclasses(ontime).Submitbothcourseexamsandscoreatleast30%oneach(i.e.makeareasonableattempt):Course Exam 1 to be submitted by the 11th working day after attending day 2Cou
3、rse Exam 2 to be submitted by the 11th working day after attending final dayCourseExamsBasedonDec2010passratesacrossallpapersintheSkills,Essentials&Optionsmodules:Overall BPP pass rate70%Pass rate for those handing in both Course Exams on time 78%Slide 7KeyDatesfortheDecember2011examRegisteredwithAC
4、CAbyOnlineinadvanceofexamentryExamentrybyEARLY8thSep11STANDARD8thOct11LATE8thNovember11Examdate6 December 2011Resultsdate20thFebruary2012Slide 8Slide 8SyllabusATheUKtaxsystemBIncometaxliabilitiesCCorporationtaxliabilitiesDChargeablegainsEInheritancetaxFNationalinsurancecontributionsGValueaddedtaxHTh
5、eobligationsoftaxpayersand/ortheiragentsSlide 9Examiner&FormatoftheExamExaminer: David Harrowven FormatoftheExamMarksQuestion1Incometaxquestioninvolvingselfemploymentandemployment.CouldincludeVAT.25-30Question2Corporationtaxquestion.CouldincludeVAT.25-30Question3Chargeablegains15Question4Willtestthe
6、remainderofthesyllabus15Question5Willtesttheremainderofthesyllabus15Total100Slide 10Slide 10ClassroomTuitionandStudySupportClassroom tuitionKeyareasofthesyllabusTargetedonwhatyouneedtoknowfortheexamStudy Support HomestudyisvitalforthispaperComprehensiveguidanceprovidedintheendofdaycheckpoints2course
7、examsmarkedandreturnedwithfeedback(CE1-50marks:CE2fullexam)Slide 11OnlineLearningEnvironment-HowtogetaccessLogindetailsemailedtoyouNotreceivedlogindetailsorhaveITqueries?Contactsupportbppchinaortelephone021-58366718Visit:/study.bpp/vle/accacol/Chapter1IntroductiontotheUKtaxsystemSyllabusGuideDetaile
8、dOutcomesTheoverallfunctionandpurposeoftaxationinamoderneconomyDifferenttypesoftaxesPrincipalsourcesofrevenuelawandpracticeTaxavoidanceandtaxevasionSlide 13OverviewSlide 14Function and purposeof taxationStructure of UKtax systemIntroduction to theUK tax systemTax avoidance/evasionTax yearSources of
9、lawTheoverallfunctionandpurposeoftaxationinamoderneconomyEconomicfactorsSocialfactorsEnvironmentalfactorsSlide 15SourcesoflawTaxLegislationSuffered by(a)IncometaxCapitalAllowancesAct2001,IncomeTax(Earnings&Pensions)Act2003IncomeTax(TradingandotherIncome)Act2005,IncomeTaxAct2007(&FinanceActs)Individu
10、alsPartners(b)CorporationtaxCorporationTaxAct2009(CTA2009),CorporationTaxAct2010(CTA2010)(&FinanceActs)UKcompanies(c)CapitalgainstaxTaxationofChargeableGainsAct1992(TCGA1992)(&FinanceActs)IndividualsPartnerships(Companiespaycorporationtaxoncapitalgains)(d)InheritancetaxInheritanceTaxAct1984(IHTA1984
11、)Individuals(d)VATValueAddedTaxesAct1994(VATA1994)(andFinanceActs)Businesses(incorporatedandunincorporated)Slide 16TaxyearThetaxyear,orfiscalyear,oryearofassessmentrunsfrom6Aprilto5Aprilfollowing.Theyearofassessment2010/11runsfrom6April2010to5April2011.Slide 17TaxavoidanceandtaxevasionTaxevasionTaxa
12、voidanceSlide 18ChaptersummarySection TopicSummary1Function and purposeof taxTaxationcanbeusedtoencourageeconomic,socialandenvironmentalbehaviour2Structure of UK taxsystemTaxesareadministeredbyHMRevenueandCustoms(HMRC)3Sources of lawTaxisembodiedwithinlegislationwhichisupdatedeachyearbytheFinanceAct
13、.4Tax yearThetaxyearrunsfrom6Aprilto5April.5Tax avoidance and taxevasionTaxevasionisillegal.Taxavoidanceislegal.Slide 19Chapter2ThecomputationoftaxableincomeandincometaxliabilitySyllabusGuideDetailedOutcomesExplainhowtheresidenceofanindividualisdetermined.Prepareabasicincometaxcomputationinvolvingdi
14、fferenttypesofincomeandcomputetheincometaxpayableCalculatetheamountofpersonalallowanceavailabletopeopleaged65andabove.Computetheamountofincometaxpayable.Explainthetreatmentofinterestpaid.Explainthetreatmentofgiftaiddonations.Slide 21SyllabusGuideDetailedOutcomesExplainthetreatmentofjointlyownedprope
15、rtybyamarriedcoupleorbyacoupleinacivilpartnership.Computetaxpayableonsavingsincome.Computetaxpayableondividendincome.Explainthetreatmentofindividualsavingsaccounts(ISAs)andothertaxexemptinvestments.Slide 22OverviewSlide 23Income tax computationThe computation of taxable incomeand income tax liabilit
16、yNon-savingsincomeScope of incometaxPersonal allowancesDividendincomeSavingsincomeGift AidScopeofincometaxUKresidentindividualsareliabletoUKincometaxontheirUKandoverseasincome.NonUKresidentindividualsareonlyliabletoUKincometaxonUKincomeonly.Slide 24ScopeofincometaxAnindividualisresidentintheUKifheis
17、:(a)presentintheUKfor183daysormoreinthetaxyear,or(b)presentintheUK90daysonaverageoverfoursuccessiveyears,iehemakessubstantialvisits.Slide 25IncomeNon-savingsincomeSavingsincome(excludingdividends)DividendincomeExemptincomeSlide 26Personalallowances(a)giventoallindividuals(b)includingchildren(c)deduc
18、tedagainstnon-savingsincomebeforesavingsincomethendividendincome.Slide 27Lectureexample1Jesseearns105,000ayearinsalary.RequiredWhatpersonalallowanceisheentitledtofor2010/11?Slide 28AnswertoLectureExample1BasicPA6,475LessreductionIncome105,000Lesslimit(100,000)5,000(2,500)Personalallowance3,975Slide
19、29Computingtaxpayable(a)Tax liability(b)Tax payableSlide 30Slide 31 IncometaxratesBasic rate bandLower rate bandHigher rate band2,44037,400NSIDISI20%10%10%10%32.5%20%40%40%Lectureexample2Holly,asinglewomanearnedasalaryof38,000(PAYE7,203),received2,025dividendincomeand4,000ofbankdepositinterestin2010
20、/11.RequiredCalculatetheincometaxpayable/repayable.Slide 32Answertolectureexample2Non-savingsSavingsDividendsTotalincomeincomeEmploymentincome38,000Bankinterest5,000Dividends2,250Netincome38,0005,0002,250Less:PA(6,475)Taxableincome31,5255,0002,25038,775Answertolectureexample2contdIncometaxthereon:NS
21、31,52520%6,305SI5,000x20%1,000DI875x10%8737,400DI1,37532.5%446Taxliability7,838Less:(2,250x10%)+(5,000x20%)(1,225)PAYE(7,203)Taxpayable(590)Lectureexample3Farylhasthefollowingincomeinthe2010/11taxyear:Salary7,500(PAYE75)Buildingsocietyinterest8,000(net)Dividends4,500(net)RequiredCalculateFarylsincom
22、etaxpayable/(repayable).Slide 35AnswertoLectureExample3Non-savingsincomeSavingsincomeDividendsEmploymentincome7,500BSI(100/80)10,000DI(100/90)5,000Netincome7,50010,0005,000Less:PA(6,475)Taxableincome1,02510,0005,000Slide 36AnswertoLectureExample3Income tax thereon:NS1,02520%205S11,41510%1412,440S18,
23、58520%1,717D15,00010%500Incometaxliability2,563Less:5,00010%(500)PAYE(75)10,00020%(2,000)Incometaxpayable(12)Slide 37Lectureexample4Hamishhastradingincomeof130,000forthetaxyear2010/11.Healsoreceivedbuildingsocietyinterestof3,000anddividendsof36,000.RequiredCalculateHamishsincometaxpayable.Slide 38An
24、swertoLectureExample4Slide 39AnswertoLectureExample4Slide 40Ageallowances(a)PAAgivenbyreferencetoindividualage(65+/75+)(b)Allowancerestrictedwherenetincomeismorethan22,900.Restriction=(netincome22,900)(c)Donotrestrictallowancebelowthenormallevelofallowances.Slide 41Lectureexample5Karenaged76,hasneti
25、ncomeof25,000.RequiredWhatpersonalallowancedoesKarenreceivefor2010/11?Slide 42Answertolectureexample5PAA9,640Less:(25,00022,900)=(1,050)8,590Lectureexample6Gloriahasemploymentincomeof117,000.Shemadeadonationof7,200(net)toacharity.RequiredCalculateherincometaxliabilityfor2010/11.Slide 44AnswertoLectu
26、reExample6Employmentincome117,000Less:PA(W1)(2,475)Taxableincome114,525ExtendBR&HRbands37,400+9,000=46,400150,000+9,000=159,000Incometax:46,40020%9,28068,12540%27,250114,52536,530Slide 45QualifyinginterestLoantobuyplantandmachineryforuseinpartnershiporemploymentLoantoinvestinpartnershipLoantobuyinte
27、restinemployeecontrolledcompanyLoantoinvestinaco-operative.Slide 46JointlyheldpropertyIncomefromjointlyheldpropertyissplit50:50unlessthecouplemakeajointdeclarationtoHMRCspecifyingtheactualproportionstheyareeachentitledto.Slide 47ChaptersummarySection TopicSummary1Scope of income taxUKresidentindivid
28、ualsareliabletoincometaxonallincome.NonUKresidentindividualsareonlyliabletoUKincometaxonUKincomeonly.2Income taxcomputationMakesureyoulearnthisProforma.3Types of incomeIncomeiscategorisedintothreesectionsnonsavings,savingsanddividendincome4Personal allowancesEveryonereceivesapersonalallowance.Howeve
29、rifadjustednetincome100,000itisreducedby1forevery2excessincome.5Computing tax payableNon-savingsincomeistaxedat20%/40%/50%Savingsincomeistaxedat10%/20%/40%/50%.Dividendincomeistaxedat10%/10%/32.5%/42.5%.Slide 48ChaptersummarySection TopicSummary6Age allowancesIf65/75+anindividualreceivesalargerperso
30、nalallowance.Thisisrestrictedifnetincomeexceeds22,900.7Gift aidGiftaiddonationsenablethetaxpayertosavetaxattheirmarginalrate.Forhigherratetaxpayersthisisachievedbyextendingthebasicrateoftaxbandbythegrossdonation.8Qualifying interestInterestoncertainloanscanbedeductedfromtotalincome9Jointly held prop
31、ertySplit50:50.Slide 49Chapter3EmploymentincomeSyllabusGuideDetailedOutcomesRecognisethefactorsthatdeterminewhetheranengagementistreatedasemploymentorselfemployment.Recognisethebasisofassessment.Computetheincomeassessable.Recognisetheallowabledeductions.Discusstheuseofthestatutoryapprovedmileageallo
32、wances.Explainhowcharitablegivingcanbemadethroughapayrolldeductionscheme.Slide 51OverviewSlide 52Employment incomeEmployment vsself employmentBasis ofassessmentTypes ofincomeAllowabledeductionsEmploymentvsselfemploymentTheadvantagesofbeingself-employedaremany:ForthebusinessFortheworkerSlide 53Employ
33、mentvsselfemploymentEmployment-contractofserviceselfemployment-contractforservicesSlide 54Slide 55 EmploymentincomeSalaryXBonusXCommission/tipsXBenefitsXXAllowabledeductions(X)EmploymentincomeXAllowabledeductionsThedeductibilityoftravelexpensesSlide 56Slide 57 TravelexpensesTemporaryworkplace40%or24
34、monthsPermanentworkplaceHomeNoallowabledeductionAllowabledeductionLectureexample1Fredhasa1500cccarandtravels11,000businessmilesayear.Heispaid35ppermilebyhisemployer.RequiredCalculatetheemploymentincomeassessment.Authorisedmileageallowancefor2010/11:Upto10,000miles40pOver10,000miles25pSlide 58Answert
35、olectureexample1Actuallypaid35p11,000miles3,850Allowed:10,00040p4,0001,00025p25011,000(4,250)Allowablededuction(400)ChaptersummarySection TopicSummary1Employment vs selfemploymentEmploymentisacontractofservice.Selfemploymentisacontractforservices.2Types of incomeAnyamountreceivedfromanofficeoremploy
36、mentisassessedunderemploymentincome.3BasisBasisofassessmentistheamountreceivedintaxyear.4AdministrationTaxiscollectedviaPAYEsystem.5Allowable deductionsDeductionscanbemadebutonlyifwholly, exclusively and necessarily in the performance of dutiesSlide 60Chapter4Taxableandexemptbenefits:ThePAYEsystemSy
37、llabusGuideDetailedOutcomesIdentifyPIIDemployees.Computetheamountsofbenefitsassessable.ExplainthepurposeofadispensationfromHMRevenue&Customs.ExplainthePAYEsystem.Slide 62OverviewSlide 63Taxable and Exempt benefits:The PAYE systemExemptDirectors and higherpaid employees P11DLower paid employeesP9DPAY
38、E systemDefinitionofemployeesearning8,500ormore(P11D)anddirectorsSalary,bonus,commissionXReimbursedexpenses/expenseallowancesXPotentialbenefitsasassessedondirectors/HPemployeesXTEST HERE XLess:deductions(X)EmploymentincomeXSlide 64Slide 65 BenefitsbasicruleTotalEarnings8,5008,500&directorsSecondhand
39、valueMarginalcosttoemployerLectureexample1Ralphhastheuseofahousebelongingtohisemployer,forwhichhepaysanotionalrentof2,500.Theannualvalueis3,000.RalphhaslivedinthehousesinceOctober2003.Ithadcostthecompany175,000inOctober2001.Taketheofficialrateofinterestfor2010/11as4%.RequiredCalculatetheassessablebe
40、nefitfor2010/11assumingthattheaccommodationisnotjob-related.Slide 66AnswertoLectureExample1AccommodationAnnualvalue3,000Additionalcharge(175,00075,000)4%4,000Employeecontribution(2,500)TaxableBenefit4,500Lectureexample2Maggielivesinjob-relatedaccommodation,andhersalaryis7,000p.a.Householdexpensesof1
41、,800arepaidbyheremployerandshehasotherbenefitstotalling2,000.RequiredCalculatetheassessablebenefitforlivingexpenses.Slide 68AnswertoLectureExample2Accommodationexpenses:PIIDemployeeassessedonlowerof:(a)Expenses1,800(b)10%netearnings=10%(7,000+2,000)900.TaxableBenefit=900(loweramount)Lectureexample3G
42、ustavHolst,aP11Demployee,wasgiventheuseofsomevideoequipmenton6October2008whenithadavalueof1,000.On1January2011thecompanygavetheequipmenttoGustav,whenitsmarketvaluewas600.RequiredShowassessablebenefitsfor2008/09,2009/10and2010/11.Slide 70AnswertoLectureExample3Useofasset:2008/091,00020%=1002009/101,0
43、0020%=2002010/111,00020%=150450AnswertoLectureExample3contdGiftofasset:2010/11Higherof:(1)MVofassetatdateofgift=600(2)MVwhenfirstprovidedminusthevaluesalreadyassessed:=1,000450=550600(higheramount)Slide 73 Companycars(P11D&directorsonly)WorkingCO2XLess(130)XDivideby5XRoundDOWNXAdd15% X%xlistpriceXLe
44、ctureexample4StuartRevverhastheuseofaVauxhallVectra1.8i.Themotorcarhasalistpriceof16,500andanofficialC02emissionrateof158g/km.Required(a)CalculateStuartsassessablebenefitfor2010/11.(b)Calculatethebenefitiftheabovecarwasadieselratherthanpetrolcar.Slide 74Lectureexample4(c)Howwouldyouranswerin(b)diffe
45、rifheonlyhaduseofthecarfor6monthsoftheyearandhecontributed1,000tohiscompanyforuseofthecar?(d)IfStuartscarhadanofficialemissionrateof117g/km,waspetrolandwasavailablefortheentiretaxyear,whatwouldtheassessablebenefitbefor2010/11?Slide 75AnswertoLectureExample4Carbenefit(a)VauxhallVectrag/km=158Lessbase
46、line(130)285=5.6rounddown=5%percentage=15+5=20%Benefit=16,50020%=3,300AnswertoLectureExample4contd(b)IfcarwasdieselBenefit=15%+5%+3%=23%16,500=3,795(c)Basicbenefit(above)=3,795=1,897Lesscontribution(1,000)897(d)16,50010%=1,650Exemptbenefitsa)Canteenavailabletoallstaff.b)Luncheonvouchersupto15pperday
47、.c)Qualifyingremovalexpensesupto8,000.d)Carparkingspacesnearplaceofwork.e)Workplacenurseries(crches),orupto55aweekofchildcareateitheranapprovedchildcarersorpaidforusingchildcarevouchers.Slide 78Exemptbenefitsf)Contributionsbyanemployertoanapprovedpensionscheme.g)Sportandrecreationalfacilitiesavailab
48、legenerallyforthestaff.h)Outplacementcounsellingservicestoemployeesmaderedundantwhohavebeenemployedfull-timeforatleasttwoyears.Theservicescanincludecounsellingtohelpadjusttothelossofthejobandtohelpinfindingotherwork.i)Workplaceparkingforbicyclesplusataxfreecyclingallowanceof20pperbusinessmile.Slide
49、79PAYEsystemWhatisit?EmployersdutiesWhatcountsaspayEmployeetaxcodesSlide 80Lectureexample5MrFinziearns15,000andissingle.In2009/10heunderpaidincometaxof50.Hehasacompanycarwithataxablebenefitof3,000.RequiredCalculateMrFinzistaxcodefor2010/11.(Assumetaxratesfor2010/11applythroughout).Slide 81AnswertoLe
50、ctureExample5PA6,475Carbenefit(3,000)Taxunderpaid(250)3,225Taxcode322LPAYEsystemChangestocodingYearendproceduresLeaversJoinersSlide 83ChaptersummarySection TopicSummary1BenefitsTodeterminewhetherornotabenefitistaxableanemployeehastobeallocatedtoeitherlowerpaidemployeesorPIIDemployees.Specificrulesap
51、plytodeterminethetaxableamountofbenefitsbutremember:employeecontributionsarealwaysdeductible(exceptprivatefuel)andprorateifthebenefitisonlyavailableforpartofataxyear.2Benefits assessable on all employeesAccommodationonlycreatesabenefitifitisnotjobrelated.3Benefits assessable on PIID employeesMakesur
52、eyoulearntheserules.Slide 84ChaptersummarySection TopicSummary4Benefits assessable onemployees earning8,500Amountassessableisthesecondhandvalue.5Exempt benefitsCertainbenefitsaretaxfree.Makesureyouknowwhichones.6PIID dispensationsTheseremovetheneedfortheemployeetoreportbusinessexpensepayments7PAYE s
53、ystem Thissystemimposesthecollectionoftaxofemployeesontotheemployer.Slide 85Chapter5PensionsSyllabusGuideDetailedOutcomesExplainandcomputethereliefgivenforcontributionstopersonalpensionschemesusingtherulesapplicablefrom6April2006.Describethereliefgivenforcontributionstooccupationalpensionschemesusin
54、gtherulesapplicablefrom6April2006.Slide 87OverviewSlide 88PensionsTypesOccupationalschemesLifetime allowancePersonal schemesAnnual allowanceTax reliefIntroductionAnindividualmaycontributetoanumberofdifferentpensionarrangementssubjecttoanannuallimitoncontributionsattractingtaxrelief.Slide 89Personals
55、chemesAnindividualcanmakeanycontributiontoapersonalpensionscheme.Thesepaymentsaremadenetofbasicratetaxof20%.Howeverthemaximumtaxrelievablecontributionsarethehigherof:(a)3,600(b)anindividualsrelevantearningschargeabletoincometaxinthatyear.Slide 90Lectureexample1Johnearned170,000in2010/11.Hemadeanetpe
56、rsonalpensioncontributionof50,000.RequiredCalculateJohnsincometaxliabilityfor2010/11.Slide 91Answertolectureexample1Earnings170,000Less:PA(W1)(2,725)Taxableincome167,275ExtendBR&HRbandsbygrosspensioncontributionBRband37,400+62,500=99,900HRband150,000+62,500=212,500Incometax:99,90020%19,98067,37540%2
57、6,950167,275Incometaxliability46,930Answertolectureexample1(W1)Adjustednetincome170,000Less:pensioncontribution50,000100/80(62,500)107,500Less:limit(100,000)Restriction7,500Personalallowance6,475Less7,500(3,750)2,725MethodsofgivingtaxreliefThemaximumtaxrelievablecontributioninataxyearisthehigherof:(
58、a)3,600(b)Individualsrelevantearningsforthattaxyear.Slide 94Lectureexample2Wendyispaidasalaryof50,000.Shepays10%ofthissalaryintoheremployersoccupationalpensionscheme.Theemployermatchesthiscontribution.Wendyalsoreceivesbenefitsof8,000inthe2010/11year.RequiredCalculateWendysemploymentincomefor2010/11.
59、Slide 95Answertolectureexample2Salary50,000Lesspensioncontribution(10%)(5,000)Addbenefits8,00053,000N.B.EmployerscontributionistaxfreeAnnualallowanceThereisanoverridinglimitcalledtheannualallowancewhichcontributorsmaynotexceedinayear.For2010/11thisis255,000andappliestobothpersonalpensionandoccupatio
60、nalpensionschemes.Ifgrosscontributionsexceedthislimittherewillbeanadditionaltaxchargeforthetaxyearinwhichthecontributionispaid.NocalculationswillbesetonthisadditionaltaxchargefromJune2011.Slide 97LifetimeallowanceAnindividualspensionfundcannotgrowbeyondacertainvaluecalledthelifetimeallowance.Thiscur
61、rentlystandsat1.8m.Ifthefundgrowsbeyondthispointtherewillbeanadditionaltaxchargewhenthatpersonsubsequentlywithdrawsthefundsonretirement.Slide 98ChaptersummarySection TopicSummary2Personal schemesContributionstopersonalpensionschemesarepaidnetofbasicratetax.Higherratereliefisgivenbyextendingthebasicr
62、atebandbythegrosspensioncontribution.3Occupational schemesThereare2typesofcompanyschemesfinalsalaryormoneypurchase.Slide 99ChaptersummarySection TopicSummary4Methods of giving taxreliefContributionstooccupationalpensionschemesaredeductedfromgrosssalarybeforePAYEisapplied.Anyamountcanbeinvested.Howev
63、ertaxreliefisonlygivenon3,600ifnoearningsoranindividualsrelevantearningsforthattaxyear.5Annual allowancesIfcontributionsexceedtheannualallowanceanadditionaltaxchargearisesontheexcess.6Lifetime allowancesThefundcannotexceed1.8m.Slide 100Chapter6PropertyincomeSyllabusGuideDetailedOutcomesComputeproper
64、tybusinessprofits.Explainthetreatmentoffurnishedholidaylettings.Describerent-a-roomrelief.Computetheamountassessablewhenapremiumisreceivedforthegrantofashortlease.Understandhowreliefforapropertybusinesslossisgiven.Slide 102OverviewSlide 103Property incomeProperty incomeLoss reliefRent a RoomAccruals
65、 basisLease premiums Furnished Holiday LettingsDeductionsPropertyincomeScopeofchargeBasisofassessmentSlide 104Lectureexample1LenownsasmallflatinLancing.Heletsitoutunfurnishedatanannualrentalof1,600from1January2010.Rentispayablequarterlyinadvance.On1January2011heraisedtherentto2,000p.a.RequiredCalcul
66、atethepropertyincomefor2010/11.Slide 105Answertolectureexample11,6009/121,2002,0003/125001,700Allowabledeductionsfrompropertyincomea)Deductallincidentalexpenses.b)Ifthelandlordborrowedmoneytopurchasetheproperty,theinterestpaidontheloanisdeductibleasanexpenseagainstpropertyincome.c)Extradeductiononfu
67、rnishedproperties:10%x(rentaccrued-counciltax-waterrates)=wearandtearallowance.Slide 107LossesRentalincome(accruals)XLessexpenses(accruals)Advertising(X)Agentsfees(X)Repairs(X)Propertyincomeprofit/(loss)AIfAisaprofittaxableinthecurrentyearIfAisalosscarryforwardtodeductfrompropertyincomeinthefuture.S
68、lide 108Lectureexample2Fionaownsapropertythatsheletsfurnishedonashorttermbasis.Intheyearended5April2011shehadaccruedrentalincomeof2,400andincurredthefollowingexpenses:Agentscommission360Mortgagerepayments(includinginterestof500)8001,160Shehasalwaysclaimedthe10%wearandtearallowanceandhaslossesbrought
69、forwardof500.Slide 109Lectureexample2RequiredHowmuchisassessableonheraspropertyincomein2010/11?Slide 110Answertolectureexample2Rents2,400Less:Agentscommission(360) Mortgageinterest(500) Wearandtear10%2,400(240)1,300Less:Lossesb/fwd(500)800Furnishedholidaylettings(FHL)AccommodationcountsasaFHLif:a)it
70、isavailableforcommerciallettingtothepublicfornotlessthan140dayseachfiscalyear,andb)itisactuallyletforatleast70daysineachfiscalyear,andc)holidaytenantsshouldnotstayforaperiodofmorethan31days.However,thepropertycanbelettothesametenantforperiodslongerthanthisprovidedtheselongletsdonottakeupmorethan155d
71、ayspertaxyear.d)itislocatedintheEEA.Slide 112Furnishedholidaylettings(FHL)TheadvantagesofhavingaFHLarethat:a)lossesarerelievedasiftheyweretradinglosses(thisismoreadvantageousthanpropertyincomelossrelief).(Seechapter10)b)capitalallowancesareavailableonfurniture.c)incomeistreatedasearnedincomeandsoqua
72、lifiesaspartofnetrelevantearningsforpensioncontributions.(Seechapter5)capitalgainstaxrolloverrelief,entrepreneursreliefandgiftreliefareavailableonanysubsequentsaleoftheproperty.(Seechapter15)Slide 113Slide 114 PremiumonashortleasePartofpremium=PropertyincomeLandlordRent=PropertyincomeGrants50yrlease
73、TenantPremiumRentLectureexample3MrsLordgrantsTimothyTenantaleasetoashopon30.6.10.Annualrental8,000dueon1.7.10Term15yearsPremium60,000RequiredCalculatethepropertyincomeassessmentonMrsLordfor2010/11.Slide 115Answertolectureexample3Premium60,000Less:2%(151)60,000(16,800)43,200Rent(8,000)6,000Propertyin
74、comeassessment49,200TradingincomedeductionfortradersPropertyincomeassessmentonlessorSlide 117Lifeofleasep.a.Lectureexample4RequiredUsingLectureexample3above,showthereliefavailabletoTimothyTenantforthepremiumpaid.Slide 118Answertolectureexample4Slide 120 Tenantisatrader?Lectureexample4LandlordGrants1
75、5yrleaseTenantPremium60,000Propertyincome=43,200Tradingdeduction=43,200/15=2,880paRentaroomreliefa)Thefirst4,250pacollectedfromatenantrentingaroominyourmainresidencewillbetaxfree.b)Iftherentreceivedexceeds4,250thetaxpayerwouldbeassessedontotalrentsreceivedlessnormalrentalexpensesbutcanelecttobeasses
76、sedontheexcessrentalsover4,250butwithnodeductionforexpenses.Slide 121ChaptersummarySection TopicSummary1Property incomeIncomeisassessedonanaccrualsbasis.Allincidentalexpensesaredeductibleincludinginterestonmoneyborrowedtoacquirepropertyandawearandtearallowanceifthepropertyisfurnished.2Furnished holi
77、daylettingsFHLsareseenasabusinessactivitysoattractcertainadvantages.3Lease premiumsLeasepremiumsonthegrantofashortleaseleadtoanelementofthepremiumbeingtreatedasrentreceivedinadvance.4Rent a room4,250collectedfromrentingaroomistaxfree.Slide 122Slide 123Slide 123Endofday1-whattodonowCheckpointGuidanceinCourseNotesReinforcetodayslearningDevelopexamskillsthroughquestionpracticeCoursenotesreviewQuestionpractice
