Tax Adviser Certification cheat sheet

Residence determines worldwide versus source-only taxation: an individual resident for the whole tax year is taxed on global income, while a non-resident is taxed only on income sourced in the jurisdiction.

Progressive bracket mechanics: tax = sum over brackets of (amount falling in bracket × bracket rate). Marginal rate applies to the next unit of income; average rate = total tax ÷ total taxable income.

Deductions reduce the tax base; credits reduce tax payable one-for-one. A credit is worth more than an equal deduction whenever the marginal rate is below 100%.

Capital gains: chargeable gain = disposal proceeds − allowable acquisition cost − allowable improvement costs − incidental disposal costs. Indexation or an inclusion rate may apply depending on the regime.

Depreciation is not deductible; instead tax depreciation (capital allowances) is granted, creating a timing difference between accounting profit and taxable profit.

Trading losses: relief is typically first against current-year profits, then carried back (often 12 months), then carried forward against future profits of the same trade; terminal loss relief applies on cessation.

Transfer pricing: intra-group transactions must be priced at arm's length. Adjustments increase taxable profit and may trigger corresponding relief or penalty exposure.

Personal reliefs and allowances are usually lost or tapered once income exceeds a threshold; the effective marginal rate in the taper band can exceed the headline top rate.

VAT is a multi-stage tax collected by businesses and borne by the final consumer; each registered business remits output tax minus input tax for the period.

Output tax = taxable value × rate. Input tax is recoverable only if attributable to taxable business supplies and supported by a valid tax invoice.

Place of supply for goods generally follows where the goods are located at supply or where transport begins; for B2B services it is generally where the business customer is established.

Distance sales and cross-border B2C services use destination-based thresholds: once the cumulative sales threshold is exceeded, the supplier must register and charge the customer's local rate.

Reverse charge shifts the reporting obligation to the recipient: the recipient self-assesses output tax and claims the same amount as input tax, giving a net-zero cash effect but a cash-flow cost if recovery is partial.

Exempt supplies give no input tax recovery; zero-rated supplies allow full recovery at a 0% rate. The distinction drives partial-exemption and apportionment calculations.

Registration thresholds are based on rolling 12-month turnover (forward look) or on an immediate future-look test; voluntary registration is available below the threshold.

Penalties and interest accrue from the original due date; late-payment interest is typically calculated daily on the outstanding amount until settled.