finance act 2012 update

7/30/2019 Finance Act 2012 Update

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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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finance act 2012 update

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