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Finance Act 2012 update
Personal tax
1 Income tax allowances
1.1 Tapering of the personal allowance
earned
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Worked example: Tapering of personal allowance
Requirement
Solution
1.2 Personal allowances for 2013/14
2 Income tax rates and bands2.1 Starting rate
2.2 Basic rate
2.3 Higher rate
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2.4 Additional rate
Worked example: Additional rate band
Requirement
Solution
2012/13 Non-savings Savings Dividends
*Note
2.5 Application of tax rate bands
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Worked example: Application of tax rate bands
Requirement
Solution Non-savings
income
Savings
income
Dividend
s
Total
Tax liability
2.6 Changes which take effect from 2013/14
3 Tax reliefs
3.1 Gift Aid
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3.2 Cap on unlimited tax reliefs
x
x
x
x
x
x
x
x
x
Illustration
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4 Savings and investments
4.1 Individual Savings Accounts (ISAs)
4.2 Junior ISAs
4.3 EIS and VCT investments
x
x
x
x
x
x
x
x
x
x
x
x
x
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4.4 Seed Enterprise investment Scheme
x
x except
x
x
x
x
x
x
x
x
Worked example: EIS & SEIS relief
Requirement
Solution
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4.5 Comparison between EIS and SEIS schemes
EIS SEIS
4.6 Furnished holiday lettings
x
x
Year election Year
election
Year election
?
?
5 Income tax charge on child benefit
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Worked example: Child benefit tax charge
Requirement
Solution
2012/13
6 Employment income
6.1 Company cars
x
x
x
x
x
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Emissions Car benefit percentage
Worked example: Changes in company car rules in 2012/13
Requirement
Solution
1,607
1,880
1,928
2,424 346
4,934
3,760
5,181
4,242 292
6.2 Official rate of interest
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6.3 Enterprise Management Incentive (EMI) schemes
6.4 Home-working household costs
6.5 Mobile telephones
7 Pension schemes
7.1 Allowances
x
x
7.2 Contracting out
7.3 Automatic pension scheme enrolment
8 National insurance contributions
8.1 Class 1
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Worked example: Primary & secondary Class 1 NIC
Requirement
Solution
Employee contributions
34.32 33.48
87.02
86.18
Employer contributions
39.88 38.78
133.03 131.93
8.2 Class 1A and 1B
8.3 Class 2
accounting
8.4 Class 3
8.5 Class 4
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Worked example: Class 4 NIC
Requirement
Solution
8.6 Contracting out of S2P
salary
8.7 NIC and income tax merger
Capital gains tax
1 Annual exempt amount
2 CGT rates
Worked example: CGT rates for 2012/13
Requirement
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Solution
3 Entrepreneurs relief
Date Lifetime limit
4 Chargeable assets
5 BPR for furnished holiday lets
6 IHT consultations
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x
x
Overseas aspects of income tax and capital gains tax
1 Taxation of non-domiciled individuals
2 Exemptions
3 Residence
4 Ordinary residence
Inheritance tax
1 Nil rate band
2 IHT rate
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Business tax
1 Capital allowances for plant and machinery
1.1 The annual investment allowance
Worked example: AIA where AP spans FY 2011 & FY 2012
Solution
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1.2 Writing down allowances for 2012/13
1.3 Interaction of capital allowances
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Worked example: Comprehensive capital allowances computation
Requirement
Solution
AIA
Five months ended 31 May 2011
Year ended 31 May 2012
Hybrid rates
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ECA/ FYA Main pool Specialrate pool
Expensivecar
Totalallowances
5m to 31 May 2011
Year to 31 May 2012
Notes
1.4 Qualifying expenditure
.
J D Wetherspoon plc v HMRC (2012) BTC 1578
1.5 First year allowances
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1.6 Special rate pool
1.7 First year tax credits
1.8 Second-hand fixtures
x
x
2 IR35
x
x
x
x
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3 Changes to accounting policy for calculating tradingprofits
Corporation tax
1 Corporation tax rates
Financial year Main rate Small profits rate Standard fraction Marginal rate
Worked example: Corporation tax rates
Solution
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Worked example: Corporation tax rates and use of losses
Y/e 31.3.12 Y/e 31.3.13
Y/e 31.3.12 Y/e 31.3.13
Requirement
.
Solution
XY Ltd Z Ltd Y/e 31.3.12 Y/e 31.3.13 Y/e 31.3.12 Y/e 31.3.13
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2 Controlled foreign companies (CFC) reform
2.1 Taxation of CFCs
2.2 Consequences of being a CFC
x
x
x
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2.3 The exemptions
x
x
x
x
x
2.4 Chargeable profits
x
x
x
x
2.5 Gateway for profits attributable to UK activities
Does the CFC charge gateway apply?
x
x
x
x
Quantifying chargeable profits
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Safe harbours
Worked example: CFC gateway entry conditions
Requirement
Solution
2.6 Non-trade financing profits
Does the CFC charge gateway apply?
x
x
2.6.2 Quantifying chargeable profits
x
x
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x
x
Finance company exemption
x
x
x
x
x
x
Worked example: Financing Income
Requirement
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Solution
2.7 The CFC charge
2.7.2 Creditable tax
2.8 Transitional rule for exempt periods
x
x
Worked example: Controlled foreign companies
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Requirement
Solution
Bubble Ltd
Slurp SA
x
x
x
x
Cheers plc
x
x
x
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3 Election to exempt profits of an overseas permanentestablishment (PE)
3.1 Exclusion from the election gains
3.2 Exclusion from the election investment business
3.3 Anti-diversion rule amended for the new CFC regime
x
x
x
x
x
x
4 Research and development
x
x
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x
5 Patent box
x
x
x
x
x
x x
x
x
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Worked example: Patent box
Requirement
Solution
6 Real estate investment trusts (REITs)
x
x
x
x
x
x
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7 Group relief normal commercial loans
x
x
8 World-wide debt cap
8.1 Disallowance of deductions
x
x
8.2 Business combinations
9 Changes to ESC C16
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x
x
10 Exempt distributions received by small companies
Value added tax
1 Registration and deregistration limits
x
x
x
2 Changes in VAT rate
x
x
x
x
3 Categorisation of supplies
x
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x
x
x
x
x
4 Fuel scale charges
5 Low value consignment relief
6 Liability of overseas traders to register
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Stamp Duty and Stamp Duty Land Tax
1 SDLT High value residential property in the UK
x
x
Property value
Tax administration
1 Review of reliefs
x
x
x x
x
x
x
x
x
x
x
2 Information powers
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3 Real Time Information (RTI) reporting
4 Payment of tax
5 Security for payment of PAYE
6 Reasonable excuse
7 Tax avoidance schemes
8 Measures for 2013/14 onwards
x
x
x
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x
x
x
x
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