f6 revision income tax computation
TRANSCRIPT
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,
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2PAPER F6
DECEMBER 2009 REVISION COURSE
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
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3PAPER F6
DECEMBER 2009 REVISION COURSE
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
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4PAPER F6
DECEMBER 2009 REVISION COURSE
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)
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5PAPER F6
DECEMBER 2009 REVISION COURSE
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//
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6PAPER F6
DECEMBER 2009 REVISION COURSE
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
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7PAPER F6
DECEMBER 2009 REVISION COURSE
coRPoRATIon TAx comPuTATIon
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
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8PAPER F6
DECEMBER 2009 REVISION COURSE
coRPoRATIon TAx comPuTATIon
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
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9PAPER F6
DECEMBER 2009 REVISION COURSE
coRPoRATIon TAx comPuTATIon
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
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10PAPER F6
DECEMBER 2009 REVISION COURSE
coRPoRATIon TAx comPuTATIon
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)
8/8/2019 F6 Revision Income Tax Computation
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11PAPER F6
DECEMBER 2009 REVISION COURSE
coRPoRATIon TAx comPuTATIon
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
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12PAPER F6
DECEMBER 2009 REVISION COURSE
coRPoRATIon TAx comPuTATIon
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"× −[ ]×