CTA Part 2 cheat sheet

2024/25 income tax rates: 20% basic (£0–£37,700), 40% higher (£37,701–£125,140), 45% additional above £125,140; personal allowance £12,570.

Personal allowance taper: reduced by £1 for every £2 of adjusted net income above £100,000, reaching nil at £125,140.

Savings: personal savings allowance £1,000 (basic), £500 (higher), nil (additional); starting rate for savings 0% on up to £5,000 where non-savings income is below that level.

Dividends: £500 allowance; rates 8.75% basic, 33.75% higher, 39.35% additional; dividend income sits above other income in the tax calculation.

Class 1 employee NIC 2024/25: 8% between £242 and £967 per week, 2% above; employer 13.8% above £175 per week; Class 2 £3.45/week; Class 4 6% between £12,570 and £50,270, 2% above.

Trading income: badges of trade indicators include profit motive, repetition, asset modification and method of acquisition; from 2024/25 profits are taxed on the tax-year basis.

Property: finance cost relief restricted to basic rate (20%) via a tax reducer; rent-a-room relief £7,500 gross per year.

Pensions: annual allowance £60,000, tapered by £1 for every £2 of adjusted income above £260,000 to a minimum of £10,000; carry forward three years; money purchase annual allowance £10,000.

Employment: beneficial loan exemption if total loans ≤£10,000; approved mileage 45p first 10,000 miles then 25p; £30,000 termination payment exemption.

Corporation tax rates (FY2023 onwards): 19% if augmented profits ≤£50,000; 25% if above £250,000; marginal relief between, giving an effective 26.5% rate.

Marginal relief = (upper limit − augmented profits) × (taxable total profits ÷ augmented profits) × 3/200.

Augmented profits = taxable total profits plus exempt distributions from companies outside the 51% group.

AIA £1m for plant and machinery; full expensing 100% for new main-pool P&M and 50% for special-rate pool, available to companies only.

Trading losses: carry back 12 months, carry forward against total profits subject to the £5m deductions allowance, or group relief; post-1 April 2017 losses are streamed.

Close company loans to participators: 33.75% s.455 charge; relief when the loan is repaid, released or written off.

Group relief: 75% common ownership and entitlement to 75% of profits and assets; consortium relief where consortium members own at least 75%.

Quarterly instalment payments: large companies with profits over £1.5m (or £10m for marginal companies) pay by instalments due 14 days after quarter end.

R&D: merged scheme from April 2024 gives 20% RDEC above the line; R&D-intensive SMEs may use ERIS with 86% enhanced deduction and 14.5% payable credit.

Annual exempt amount £3,000 (2024/25); CGT rate 18% within the basic rate band and 24% above for residential property and other assets from 30 October 2024.

BADR: 10% rate for 2024/25 on qualifying gains up to a £1m lifetime limit; rate rises to 14% in 2025/26 and 18% in 2026/27.

PPR relief: exempts gains on the main residence plus the final 9 months; lettings relief only where the owner shares occupation.

Chattels: disposal proceeds ≤£6,000 exempt; marginal relief caps the gain at 5/3 × (proceeds − £6,000).

Losses: offset against gains in the same year first, then carried forward; losses must be notified within 4 years of the end of the tax year.

Gifts: disposal at market value; holdover relief available for business assets and gifts into trusts; incorporation relief where a business is transferred to a company.

Share matching: same-day acquisitions, then acquisitions in the previous 30 days, then the pool of shares acquired earlier.

Non-residents: CGT applies to UK residential property and, from April 2019, UK land and property; rebasing to 5 April 2015 is available.

BADR requires a trading company, 5% shareholding and officer or employee status for 24 months.

IHT nil rate band £325,000; residence nil rate band £175,000 per person, tapered by £1 for every £2 of estate above £2m; both transferable between spouses.

Death rate 40%; lifetime chargeable transfers 20%; reduced 36% rate if at least 10% of the net estate goes to charity.

PETs: no immediate charge; fail if the donor dies within 7 years; taper relief reduces tax by 8%, 16%, 24% or 32% for survival of 3–7 years.

Annual exemption £3,000 per donor; small gifts £250 per donee; normal expenditure out of income exempt; marriage gifts £5,000, £2,500 or £1,000.

Business relief 100% or 50% on qualifying shares and business property; agricultural relief 100% on agricultural property; minimum ownership period 2 years.

Relevant property trusts: 20% entry charge, up to 6% ten-year anniversary charge and 6% exit charge; trust nil rate band is £325,000 less cumulation.

Gifts with reservation of benefit: the donor retains a benefit, so the asset remains in the estate unless full market rent is paid.

Seven-year cumulation: chargeable transfers in the previous 7 years reduce the nil rate band available on death.

Trust registration service: most trusts must register with HMRC within 90 days of creation or a change in trustees.

VAT rates: standard 20%, reduced 5%, zero 0%; registration threshold £90,000; deregistration threshold £88,000.

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

VAT returns are quarterly, due one month and 7 days after the period end; payment is usually due on the same date; MTD for VAT applies above £90,000.

Partial exemption: exempt input tax is fully recoverable if it is ≤50% of total input tax and ≤£625 per month on average.

Option to tax: makes supplies of land and buildings standard-rated; irrevocable for 20 years unless HMRC consents.

Domestic reverse charge for construction: the customer accounts for VAT on specified services and the supplier invoices without VAT.

Penalties: points-based late submission penalties and late payment penalties of 2% at 15 days, 2% at 30 days, then 4% per annum.

Cash accounting threshold £1.35m; flat rate scheme threshold £150,000; annual accounting threshold £1.35m.

Self assessment: online return due 31 January after the tax year end; paper return 31 October; payments on account due 31 January and 31 July.

Payments on account: required where the previous year's liability exceeds £1,000 and less than 80% was collected at source; each payment is 50%.

Late filing penalties: £100 fixed, £10 per day after 3 months (maximum £900), 5% or £300 after 6 months, 5% or £300 after 12 months.

Late payment: 5% of unpaid tax at 30 days, 6 months and 12 months; interest runs daily.

Enquiry window: HMRC has 12 months from the actual filing date; discovery assessments may be made up to 4, 6 or 20 years depending on behaviour.

Error penalties: careless 30%, deliberate 70%, deliberate and concealed 100%; reductions apply for unprompted disclosure.

Record retention: individuals 5 years after 31 January following the tax year; companies 6 years from the end of the accounting period.

Ethics: PCRT fundamental principles are integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Money laundering: MLR 2017 requires customer due diligence, record keeping and suspicious activity reports to the NCA.