Paper F6 Revision Proformas

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1PAPer F6 December 2011 examinations

Income TAx comPuTATIonMr. A

Tax Year 2010/11

Non Savings Savings Dividends

Tax adjusted trading profit W1

Employment Income W4

Property Income W5

Bank Interest × 100⁄80

Building society Interest × 100⁄80

Other Interest received gross

Dividends × 100⁄90

Total Income

Less: Reliefs:

Qualifying interest

Loss Reliefs:

Net Income

Less Personal Allowance (Note 1) (6,475)

Taxable Income

Note 1

Standard PA abated if Adjusted Net Income > £100,000

Note 2

PAA 65 + 9,490

75 + 9,640

Abated if Adjusted Net income > £22,900

Note 3

Adjusted Net Income = Net Income less gross gift aid payments and gross personal pension contributions



TAx cAlculATIonNon Savings

37,400 @ 20% (Note 4)

37,401 - 150,000 @ 40%

150,001 + @ 50%

Savings (Note 5)

(After Non savings)

37,400 @ 20%

37,401 - 150,000 @ 40%

150,001 + @ 50%

Dividends

(After Non Savings & Savings)

37,400 @ 10%

37,401 - 150,000 @ 321/2%

150,001 + @ 421/2%

Less Tax deducted @ source

Dividends

Bank Interest

Building society interest

PAYE

Tax Payable / (Repayable)

Note 4

Extend Basic rate band by gross contributions to charity under the Gift Aid scheme and gross contributions to a private pension scheme.

Note 5

A special starting rate of 10% applies on savings income only, if taxable non-savings income < £2,440



TAx cAlculATIonW1 Tax adjusted trading profit

Adjusted Profit W2

Less Capital allowances W3

Tax adjusted trading profit

W2 Adjusted profit

Net Profit per Accounts

Add back Expenses Disallowed for tax

Deduct Income assessed elsewhere or not taxed

Adjusted profit

W3 Capital Allowances% = business

useGeneral Pool Special rate

PoolExpensive car Private use

AssetShort life asset Allowances

WDV b/f X XAdditions qualifying for AIA- long life assets

- integral features of a building

- thermal insulation on a business building[MAXIMUM £100,000 p.a] - Balance goes into special rate pool

Additions qualifying for AIA

- Plant & machinery (Balance of the MAXIMUM £100,000 p.a. if not on above)Balance goes into general pool

Other additions not qualifying for AIA/FYA

Motor cars 111 - 160g/km

Motor cars > 160g/km

Disposals

WDA @ 20%WDA @ 10%WDA restricted (3,000 pa)Balancing (allowance) / charge

Additions qualifying for FYAMotor cars ≤ 110g/kmFYA @ 100%

WDV c/f

Assess using Current Year Basis / opening year rules / change of accounting year rules / closing year rules



TAx cAlculATIonW4 Employment Income

SalaryBonusBenefits

lessAllowable Deductions

Employment Income

W5 Property Income

Rental Income accruing XLess: Allowable expenses (X)Wear & tear allowance for furnished property (X)Property Income in the year XLess: Property losses b/f (X)Property Income assessed X

Note:

(a) Property may be classified as furnished holiday letting

(b) If a lodger in main residence :

Lower of:

• normalcalculation(above)or

• Rental Income XLess: rent a room relief (4,250)Property Income (X)

(c) Premium on short lease (≤ 50 years)

Taxable amount = Premium ×51 – n

50

n = term of lease



cAPITAl GAIns TAx - IndIvIduAls1 Basic computation

Disposal proceeds XLess: incidental costs of disposal (X)Net proceeds XLess: Acquisition costs (X)Enhancement expenditure (X)Capital Gain XLess 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 XLess: incidental costs of disposal (X)Net proceeds XLess: Acquisition costs (X)Enhancement expenditure (X)Capital loss (X)

4 Summary

Revised Capital Gains in the year XLess: Capital Losses in the year (X)Net Capital Gains in the year XLess: Capital losses brought forward (X)Net Capital Gains XLess: Annual Exemption (10,100)Taxable Gains XCGT @ 18% / 28% Note (6) XDue 31/1/12

Note (6)

CGT rates depend upon taxable income;

If taxable income ≤ 37,400 – CGT rate = 18%

If taxable income > 37,400 – CGT rate = 28%



corPorATIon TAx comPuTATIonABC LimitedAccounting period ending…

Tax adjusted trading profit W1

Interest Receivable W5

Property Income W6

Overseas Income W7

Chargeable Gains W8

less

Gift Aid payments

Taxable Total Profits

Corporation Tax W9

Due Date

Filing Date

Note:

Dividends received from UK and overseas companies are not taxable



corPorATIon TAx comPuTATIonW1 Tax adjusted trading profit

Adjusted profit W2

less

Capital Allowances W3

Industrial Buildings allowances W4

Tax adjusted trading profit

W2 Adjusted Profit

Net Profit Before Taxation per Accounts

Add back Expenses Disallowed per tax

Deduct Income assessed elsewhere or not taxed

Adjusted Profit



corPorATIon TAx comPuTATIonW3 Capital Allowances

General Pool Special rate Pool

Expensive car Short life asset Allowances

WDV b/f X XAdditions qualifying for AIA- long life assets

- integral features of a building

- thermal insulation on a business building[MAXIMUM £100,000 p.a] - Balance goes intospecial rate pool

Additions qualifying for AIA

- Plant & machinery (Balance of the MAXIMUM £100,000 p.a. if not on above)Balance goes into general pool

Other additions not qualifying for AIA / FYA

Motor cars 111 - 160g/km

Motor cars > 160g/km

Disposals

WDA @ 20%WDA @ 10%WDA restricted (3,000 pa)Balancing (allowance) / charge

Additions qualifying for FYA @ 40% Motor cars ≤ 110g/kmFYA @ 100%

WDV c/f



corPorATIon TAx comPuTATIonW4 Industrial Buildings allowances

Full industrial use:WDA = Cost x 1% 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 useNotional 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



corPorATIon TAx comPuTATIonW5 Interest receivable

Interest receivable

less

Interest payable on non trading loans

W6 Property IncomeRental Income

less

Allowable Expenses

(including wear & tear for furnished property)

Also Premium on short lease (≤ 50 years)

Taxable Amount = Premium = term of leas×−51

50n

n ee

W7 Overseas IncomeOversees income grossed up for

– withholding tax

W8 Chargeable GainsDisposal Proceeds

Less incidental costs of disposal

Net Sales Proceeds

Less

Acquisition costs

Enhancement Expenditure

Unindexed Gain

Less Indexation allowance Chargeable Gain less reliefsLess Capital loss Capital loss b/f

Net Chargeable Gains (to go into the corporation tax computation)



corPorATIon TAx comPuTATIonCapital 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



corPorATIon TAx comPuTATIonW9 Corporation Tax‘Augmented profits’ = Taxable Total Profits + Franked Investment Income (FII)

Financial Year

Limits (adjust for short accounting period and / or associated companies)

Compare ‘Augmented profits’ to limits W10

Calculation of Tax

TTP × tax rate X

less Double tax relief

Lower of – UK tax (X)

– overseas tax

Corporation tax payable X

FII = UK and overseas dividends from non-associated companies [<50%] x 100⁄90

W10 0

21% = Small profits rate

300,000

28% less marginal relief

1,500,000

28% = Main rate

marginal relief

Fraction × [Limit – ‘Augmented profits’] × Taxable Total Profits'Augmented profits'

Paper F6 Revision Proformas

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