ACCA TX-UK flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Tax year dates

The UK tax year runs from 6 April in one year to 5 April in the following year; individuals and unincorporated businesses are taxed by reference to this period.

Self Assessment filing deadline

Online returns must be filed by 31 January following the end of the tax year; paper returns are due by 31 October after the tax year end.

Payments on account

Two advance payments each equal to 50% of the prior year's net income tax liability, due 31 January and 31 July, where the liability exceeds £1,000.

Discovery assessment time limits

HMRC may raise a discovery assessment within 4 years normally, 6 years for careless error and 20 years where the taxpayer's behaviour was deliberate.

Late filing penalty

A £100 fixed penalty applies immediately, followed by £10 per day after three months and 5% or £300 after six and twelve months.

Personal allowance taper

The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000, removing it entirely once income reaches £125,140.

Personal savings allowance

Savings income of £1,000 is taxed at 0% for basic rate taxpayers, £500 for higher rate taxpayers and nil for additional rate taxpayers.

Dividend nil rate band

The first £500 of dividend income is taxed at 0%; dividends above this are taxed at 8.75%, 33.75% or 39.35% depending on the taxpayer's band.

Class 4 NIC rates

Self-employed profits between the lower and upper profits limits are charged at 6%, with profits above the upper profits limit charged at 2%.

Employment expenses test

An expense is deductible against employment income only if it is wholly, exclusively and necessarily incurred in the performance of the duties of the employment.

Gift Aid band extension

A Gift Aid donation extends the basic rate band by the grossed-up donation, allowing higher rate taxpayers to obtain additional relief on the donation.

Capital gains tax rates

Gains on most assets are taxed at 10% within the basic rate band and 20% above it; residential property gains are taxed at 18% and 24%.

Business Asset Disposal Relief

Qualifying gains are charged at 10% instead of the standard CGT rates, subject to a lifetime limit of £1 million per individual.

Principal private residence relief

The main home is exempt from CGT, and the final 9 months of ownership are always exempt even if the owner has moved out.

Inheritance tax nil rate band

The nil rate band is £325,000 per individual; the residence nil rate band adds up to £175,000 where a main home passes to direct descendants.

Potentially exempt transfers

Lifetime transfers to individuals become exempt if the transferor survives seven years; taper relief reduces tax on failed PETs between three and seven years.

Reduced IHT rate

The inheritance tax rate falls from 40% to 36% where at least 10% of the net estate is left to qualifying charities.

Chargeable lifetime transfers

Transfers into discretionary trusts are charged at 20% on the excess over the nil rate band, with prior transfers in the previous seven years cumulated.

Corporation tax rates

The main rate is 25% for augmented profits above £250,000, the small profits rate is 19% at or below £50,000, and marginal relief applies between the limits.

Marginal relief formula

Marginal relief equals the standard fraction multiplied by the difference between the upper limit and augmented profits, reducing the effective rate between the thresholds.

Augmented profits

Taxable total profits plus exempt distributions from companies outside the group; the thresholds are divided by the number of associated companies.

Group relief ownership test

Group relief requires at least 75% common ownership between companies; consortium relief requires at least 20% ownership by a consortium member.

Capital allowances rates

The annual investment allowance and full expensing give immediate relief on qualifying plant; writing-down allowances are 18% or 6% on pools.

Quarterly instalments

Companies pay corporation tax by quarterly instalments where their tax liability exceeds £1.5 million, divided by the number of associated companies.

VAT registration threshold

Registration is compulsory once taxable turnover exceeds £90,000 in any rolling 12 months, or where it is expected to exceed the threshold in the next 30 days.

VAT return deadline

VAT returns are usually filed quarterly, with the return and payment due one month and seven days after the end of the VAT period.

Blocked input tax

Input VAT on business entertainment and on cars, unless used exclusively for business, cannot be recovered as input tax.

Partial exemption de minimis

Input tax attributable to exempt supplies is recoverable where it falls below the de minimis limits, otherwise it must be apportioned using the standard method.

VAT bad debt relief

Relief for VAT on a bad debt can be claimed six months after the due date of payment, provided the debt has been written off.

Stamp duty on shares

Transfers of shares are charged to stamp duty at 0.5% of consideration, rounded up to the nearest £5, with no charge where consideration is £1,000 or less.

PAYE payment deadline

Employers pay PAYE and NIC electronically by the 22nd of the following month, or the 19th where payment is made by post.

Flat rate VAT scheme

Small businesses below the turnover limit may apply a flat percentage to gross turnover instead of calculating output tax less input tax.