ACCA 2H F6 slides day 1 TAUGHT

,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Slide,*,notes reference - page,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Slide,*,ACCA Paper F6 Taxation(UK),Taught Course,December 2011 Exams,Tutor Name,Tutor Telephone,Tutornamebpp,Slide,2,Health & Safety Procedures,Fire alarm = continuous bell,Fire Exits,Assembly point,First aid,Slide,3,Course Administration,Start and finish times,Breaks,Daily attendance register,Slide,4,Facilities,Toilets,Canteen/common room,Drinks machines,Internet facilities,After class study room,Switch off Mobile Phones,Slide,5,Pass Assurance,You must:,Book on both a taught and revision course.,Attend all classes (on time).,Submit both course exams and score at least 30% on each (i.e. make a reasonable attempt):,Course Exam 1 to be submitted by the 11,th,working day after,attending,day 2,Course Exam 2 to be submitted by the 11,th,working day after,attending,final day,Course Exams,Based on Dec 2010 pass rates across all papers in the Skills, Essentials & Options modules:,Overall BPP pass rate,70%,Pass rate for those handing in both Course Exams on time,78%,Slide,7,Key Dates for the December 2011 exam,Registered with ACCA by,Online in advance of exam entry,Exam entry by,EARLY 8,th,Sep 11,STANDARD 8,th,Oct 11,LATE 8,th,November 11,Exam date,6 December 2011,Results date,20,th,February 2012,Slide,8,Slide,8,Syllabus,A,The UK tax system,B,Income tax liabilities,C,Corporation tax liabilities,D,Chargeable gains,E,Inheritance tax,F,National insurance contributions,G,Value added tax,H,The obligations of taxpayers and/or their agents,Slide,9,Examiner & Format of the Exam,Examiner: David Harrowven,Format of the Exam,Marks,Question 1,Income tax question involving self employment and employment. Could include VAT.,25-30,Question 2,Corporation tax question. Could include VAT.,25-30,Question 3,Chargeable gains,15,Question 4,Will test the remainder of the syllabus,15,Question 5,Will test the remainder of the syllabus,15,Total,100,Slide,10,Slide,10,Classroom Tuition and Study,Support,Classroom tuition,Key areas of the syllabus,Targeted on what you need to know for the exam,Study Support,Home study is vital for this paper,Comprehensive guidance provided in the end of day checkpoints,2 course exams marked and returned with feedback,(CE1- 50 marks : CE2 full exam),Slide,11,Online Learning Environment - How to get access,Log in details emailed to you,Not received log in details or have IT queries?,Contact supportbppchina or telephone 021-58366718,Visit :/study.bpp/vle/ accacol/,Chapter 1,Introduction to,the UK tax system,Syllabus Guide Detailed Outcomes,The overall function and purpose of taxation in a modern economy,Different types of taxes,Principal sources of revenue law and practice,Tax avoidance and tax evasion,Slide,13,Overview,Slide,14,Function and purpose,of taxation,Structure of UK,tax system,Introduction to the,UK tax system,Tax avoidance/,evasion,Tax year,Sources of law,The overall function and purpose of taxation in a modern economy,Economic factors,Social factors,Environmental factors,Slide,15,Sources of law,Tax,Legislation,Suffered by,(a),Income tax,Capital Allowances Act 2001,Income Tax (Earnings &,Pensions) Act 2003,Income Tax (Trading and other,Income) Act 2005, Income Tax,Act 2007 (& Finance Acts),Individuals,Partners,(b),Corporation tax,Corporation Tax Act 2009,(CTA 2009), Corporation Tax,Act 2010 (CTA 2010) (&,Finance Acts),UK companies,(c),Capital gains tax,Taxation of Chargeable,Gains Act 1992 (TCGA 1992),(& Finance Acts),Individuals,Partnerships,(Companies pay corporation,tax on capital gains),(d),Inheritance tax,Inheritance Tax Act 1984,(IHTA 1984),Individuals,(d),VAT,Value Added Taxes Act 1994,(VATA 1994) (and Finance,Acts),Businesses (incorporated and,unincorporated),Slide,16,Tax year,The tax year, or fiscal year, or year of assessment runs from 6 April to 5 April following.,The year of assessment 2010/11 runs from 6 April 2010 to 5 April 2011.,Slide,17,Tax avoidance and tax evasion,Tax evasion,Tax avoidance,Slide,18,Chapter summary,Section,Topic,Summary,1,Function and purpose,of tax,Taxation can be used to encourage economic, social and environmental behaviour,2,Structure of UK tax,system,Taxes are administered by HM Revenue and Customs (HMRC),3,Sources of law,Tax is embodied within legislation which is updated each year by the Finance Act.,4,Tax year,The tax year runs from 6 April to 5 April.,5,Tax avoidance and tax,evasion,Tax evasion is illegal.,Tax avoidance is legal.,Slide,19,Chapter 2,The computation of,taxable income and,income tax liability,Syllabus Guide Detailed Outcomes,Explain how the residence of an individual is determined.,Prepare a basic income tax computation involving different types of income and compute the income tax payable,Calculate the amount of personal allowance available to people aged 65 and above.,Compute the amount of income tax payable.,Explain the treatment of interest paid.,Explain the treatment of gift aid donations.,Slide,21,Syllabus Guide Detailed Outcomes,Explain the treatment of jointly owned property by a married couple or by a couple in a civil partnership.,Compute tax payable on savings income.,Compute tax payable on dividend income.,Explain the treatment of individual savings accounts (ISAs) and other tax exempt investments.,Slide,22,Overview,Slide,23,Income tax computation,The computation of taxable income,and income tax liability,Non-savings,income,Scope of income,tax,Personal allowances,Dividend,income,Savings,income,Gift Aid,Scope of income tax,UK resident individuals are liable to UK income tax on their UK and overseas income. Non UK resident individuals are only liable to UK income tax on UK income only.,Slide,24,Scope of income tax,An individual is resident in the UK if he is:,(a) present in the UK for 183 days or more in the tax year, or,(b) present in the UK 90 days on average over four successive years, ie he makes substantial visits.,Slide,25,Income,Non-savings income,Savings income (excluding dividends),Dividend income,Exempt income,Slide,26,Personal allowances,(a) given to all individuals,(b) including children,(c) deducted against non-savings income before savings income then dividend income.,Slide,27,Lecture example 1,Jesse earns 105,000 a year in salary.,Required,What personal allowance is he entitled to for 2010/11?,Slide,28,Answer to Lecture Example 1,Basic PA 6,475,Less reduction,Income 105,000,Less limit,(100,000),5,000, ,(2,500,),Personal allowance,3,975,Slide,29,Computing tax payable,(a),Tax liability,(b),Tax payable,Slide,30,Slide,31,Income tax rates,Basic rate band,Lower rate band,Higher rate band,2,440,37,400,NSI,DI,SI,20%,10%,10%,10%,32.5%,20%,40%,40%,Lecture example 2,Holly, a single woman earned a salary of 38,000 (PAYE 7,203), received 2,025 dividend income and 4,000 of bank deposit interest in 2010/11.,Required,Calculate the income tax payable/repayable.,Slide,32,Answer to lecture example 2,Non-savings,Savings,Dividends,Total,income,income,Employment income,38,000,Bank interest,5,000,Dividends,2,250,Net income,38,000,5,000,2,250,Less: PA,(6,475,),Taxable income,31,525,5,000,2,250,38,775,Answer to lecture example 2 contd,Income tax thereon:,NS 31,525,20%,6,305,SI 5,000 x 20%,1,000,DI,875,x 10%,87,37,400,DI 1,375,32.5%,446,Tax liability,7,838,Less:,(2,250 x 10%) + (5,000 x 20%),(1,225),PAYE,(7,203,),Tax payable,(590),Lecture example 3,Faryl has the following income in the 2010/11 tax year:,Salary 7,500 (PAYE 75),Building society interest 8,000 (net),Dividends 4,500 (net),Required,Calculate Faryls income tax payable/(repayable).,Slide,35,Answer to Lecture Example 3,Non-savings,income,Savings,income,Dividends,Employment income,7,500,BSI ( 100/80),10,000,DI (100/90),5,000,Net income,7,500,10,000,5,000,Less: PA,(6,475),Taxable income,1,025,10,000,5,000,Slide,36,Answer to Lecture Example 3,Income tax thereon:,NS 1,025 20%,205,S1,1,415, 10%,141,2,440,S1 8,585 20%,1,717,D1 5,000 10%,500,Income tax liability,2,563,Less: 5,000 10%,(500),PAYE,(75),10,000 20%,(2,000),Income tax payable,(12),Slide,37,Lecture example 4,Hamish has trading income of 130,000 for the tax year 2010/11. He also received building society interest of 3,000 and dividends of 36,000.,Required,Calculate Hamishs income tax payable.,Slide,38,Answer to Lecture Example 4,Slide,39,Answer to Lecture Example 4,Slide,40,Age allowances,(a) PAA given by reference to individual age (65+/75+),(b) Allowance restricted where net income is more than 22,900. Restriction = (net income 22,900),(c) Do not restrict allowance below the normal level of allowances.,Slide,41,Lecture example 5,Karen aged 76, has net income of 25,000.,Required,What personal allowance does Karen receive for 2010/11?,Slide,42,Answer to lecture example 5,PAA,9,640,Less: (25,000 22,900) =,(1,050,),8,590,Lecture example 6,Gloria has employment income of 117,000. She made a donation of 7,200 (net) to a charity.,Required,Calculate her income tax liability for 2010/11.,Slide,44,Answer to Lecture Example 6,Employment income 117,000,Less: PA (W1),(2,475),Taxable income,114,525,Extend BR & HR bands,37,400 + 9,000 = 46,400,150,000 + 9,000 = 159,000,Income tax:,46,400 20% 9,280,68,125 40%,27,250,114,525,36,530,Slide,45,Qualifying interest,Loan to buy plant and machinery for use in partnership or employment,Loan to invest in partnership,Loan to buy interest in employee controlled company,Loan to invest in a co-operative.,Slide,46,Jointly held property,Income from jointly held property is split 50:50 unless the couple make a joint declaration to HMRC specifying the actual proportions they are each entitled to.,Slide,47,Chapter summary,Section,Topic,Summary,1,Scope of income tax,UK resident individuals are liable to income tax on all income.,Non UK resident individuals are only liable to UK,income tax on UK income only.,2,Income tax,computation,Make sure you learn this Proforma.,3,Types of income,Income is categorised into three sections nonsavings, savings and dividend income,4,Personal allowances,Everyone receives a personal allowance. However if,adjusted net income 100,000 it is reduced by 1 for every 2 excess income.,5,Computing tax payable,Non-savings income is taxed at 20%/40%/50%,Savings income is taxed at 10%/20%/40%/50%.,Dividend income is taxed at 10%/10%/32.5%/42.5%.,Slide,48,Chapter summary,Section,Topic,Summary,6,Age allowances,If 65/75+ an individual receives a larger personal,allowance. This is restricted if net income exceeds,22,900.,7,Gift aid,Gift aid donations enable the taxpayer to save tax at their marginal rate. For higher rate taxpayers this is achieved by extending the basic rate of tax band by the gross donation.,8,Qualifying interest,Interest on certain loans can be deducted from total income,9,Jointly held property,Split 50 : 50.,Slide,49,Chapter 3,Employment income,Syllabus Guide Detailed Outcomes,Recognise the factors that determine whether an engagement is treated as employment or self employment.,Recognise the basis of assessment.,Compute the income assessable.,Recognise the allowable deductions.,Discuss the use of the statutory approved mileage allowances.,Explain how charitable giving can be made through a payroll deduction scheme.,Slide,51,Overview,Slide,52,Employment income,Employment vs,self employment,Basis of,assessment,Types of,income,Allowable,deductions,Employment vs self employment,The advantages of being self-employed are many:,For the business,For the worker,Slide,53,Employment vs self employment,Employment - contract of service,self employment - contract for services,Slide,54,Slide,55,Employment income,Salary X,Bonus X,Commission / tips X,Benefits,X,X,Allowable deductions,(X),Employment income,X,Allowable deductions,The deductibility of travel expenses,Slide,56,Slide,57,Travel expenses,Temporary workplace, 40% or,24 months,Permanent workplace,Home,No allowable,deduction,Allowable,deduction,Lecture example 1,Fred has a 1500cc car and travels 11,000 business miles a year. He is paid 35p per mile by his employer.,Required,Calculate the employment income assessment.,Authorised mileage allowance for 2010/11:,Up to 10,000 miles 40p,Over 10,000 miles 25p,Slide,58,Answer to lecture example 1,Actually paid 35p,11,000 miles,3,850,Allowed:,10,000,40p 4,000,1,000,25p,250,11,000,(4,250,),Allowable deduction,(400,),Chapter summary,Section,Topic,Summary,1,Employment vs self,employment,Employment is a contract of service. Self employment is a contract for services.,2,Types of income,Any amount received from an office or employment is assessed under employment income.,3,Basis,Basis of assessment is the amount received in tax year.,4,Administration,Tax is collected via PAYE system.,5,Allowable deductions,Deductions can be made but only if,wholly, exclusively and necessarily in the performance of duties,Slide,60,Chapter 4,Taxable and exempt,benefits: The PAYE,system,Syllabus Guide Detailed Outcomes,Identify PIID employees.,Compute the amounts of benefits assessable.,Explain the purpose of a dispensation from HM Revenue & Customs.,Explain the PAYE system.,Slide,62,Overview,Slide,63,Taxable and Exempt benefits:,The PAYE system,Exempt,Directors and higher,paid employees P11D,Lower paid employees,P9D,PAYE system,Definition of employees earning 8,500 or more (P11D) and directors,Salary, bonus, commission X,Reimbursed expenses/expense allowances X,Potential benefits as assessed,on directors/HP employees,X,TEST HERE X,Less: deductions,(X),Employment income,X,Slide,64,Slide,65,Benefits basic rule,Total Earnings, 8,500,8,500 & directors,Second hand,value,Marginal cost to employer,Lecture example 1,Ralph has the use of a house belonging to his employer, for which he pays a notional rent of 2,500. The annual value is 3,000.,Ralph has lived in the house since October 2003. It had cost the company 175,000 in October 2001.,Take the official rate of interest for 2010/11 as 4%.,Required,Calculate the assessable benefit for 2010/11 assuming that the accommodation is not job-related.,Slide,66,Answer to Lecture Example 1,Accommodation,Annual value,3,000,Additional charge,(175,000 75,000),4%,4,000,Employee contribution,(2,500,),Taxable Benefit,4,500,Lecture example 2,Maggie lives in job-related accommodation, and her salary is 7,000 p.a. Household expenses of 1,800 are paid by her employer and she has other benefits totalling 2,000.,Required,Calculate the assessable benefit for living expenses.,Slide,68,Answer to Lecture Example 2,Accommodation expenses: PIID employee assessed on lower of:,(a),Expenses,1,800,(b),10% net earnings,= 10% (7,000 + 2,000),900,.,.,. Taxable Benefit = 900 (lower amount),Lecture example 3,Gustav Holst, a P11D employee, was given the use of some video equipment on 6 October 2008 when it had a value of 1,000. On 1 January 2011 the company gave the equipment to Gustav, when its market value was 600.,Required,Show assessable benefits for 2008/09, 2009/10 and 2010/11.,Slide,70,Answer to Lecture Example 3,Use of asset:,2008/09,1,000,20%,= 100,2009/10,1,000,20%,= 200,2010/11,1,000,20%,=,150,450,Answer to Lecture Example 3 contd,Gift of asset:,2010/11,Higher of:,(1),MV of asset at date of gift,= 600,(2),MV when first provided minus the,values already assessed:,= 1,000 450,= 550,600,(higher amount),Slide,73,Company cars,(P11D & directors only),Working,CO,2,X,Less,(130),X,Divide by 5,X,Round,DOWN,X,Add,15%,X%,x list price,X,Lecture example 4,Stuart Revver has the use of a Vauxhall Vectra 1.8i. The motor car has a list price of 16,500 and an official C02 emission rate of 158g/km.,Required,(a) Calculate Stuarts assessable benefit for 2010/11.,(b) Calculate the benefit if the above car was a diesel rather than petrol car.,Slide,74,Lecture example 4,(c) How would your answer in (b) differ if he only had use of the car for 6 months of the year and he contributed 1,000 to his company for use of the car?,(d) If Stuarts car had an official emission rate of 117g/km, was petrol and was available for the entire tax year, what would the assessable benefit be for 2010/11?,Slide,75,Answer to Lecture Example 4,Car benefit,(a),Vauxhall Vectra g/km = 158,Less base line (130),28,5 = 5.6,round down = 5%,percentage = 15 + 5 = 20%,Benefit = 16,500,20% = 3,300,Answer to Lecture Example 4 contd,(b),If car was diesel,Benefit =,15% + 5% + 3% = 23% 16,500 = 3,795,(c),Basic benefit (above)=,3,795,= 1,897,Less contribution (1,000),897,(d) 16,500 10% = 1,650,Exempt benefits,Canteen available to all staff.,Luncheon vouchers up to 15p per day.,Qualifying removal expenses up to 8,000.,Car parking spaces near place of work.,Workplace nurseries (crches), or up to 55 a week of childcare at either an approved child carers or paid for using childcare vouchers.,Slide,78,Exempt benefits,Contributions by an employer to an approved pension scheme.,Sport and recreational facilities available gene rally for the staff.,Outplacement counselling services to employees made redundant who have been employed full-time for at least two years. The services can include counselling to help adjust to the loss of the job and to help in finding other work.,Workplace parking for bicycles plus a tax free cycling allowance of 20p per business mile.,Slide,79,PAYE system,What is it?,Employers duties,What counts as pay,Employee tax codes,Slide,80,Lecture example 5,Mr Finzi earns 15,000 and is single. In 2009/10 he underpaid income tax of 50.,He has a company car with a taxable benefit of 3,000.,Required,Calculate Mr Finzis tax code for 2010/11. (Assume tax rates for 2010/11 apply throughout).,Slide,81,Answer to Lecture Example 5,PA,6,475,Car benefit,(3,000),Tax underpaid,(250,),3,225,Tax code,322L,PAYE system,Changes to coding,Year end procedures,Leavers,Joiners,Slide,83,Chapter summary,Section,Topic,Summary,1,Benefits,To determine whether or not a benefit is taxable an employee has to be allocated to either lower paid employees or PIID employees. Specific rules apply to determine the taxable amount of benefits but remember:, employee contributions are always deductible,(except private fuel) and, prorate if the benefit is only available for part of a tax year.,2,Benefits assessable on all employees,Accommodation only creates a benefit if it is not job related.,.,3,Benefits assessable on PIID employees,Make sure you learn these rules.,Slide,84,Chapter summary,Section,Topic,Summary,4,Benefits assessable on,employees earning,8,500,Amount assessable is the second hand value.,5,Exempt benefits,Certain benefits are tax free. Make sure you know which ones.,6,PIID dispensations,These remove the need for the employee to report business expense payments,7,PAYE system,This system imposes the collection of tax of