Questions and Answers of Taxation of Individuals

In relation to the previous example, assume now that Alice always let her Derby house when she was not resident there. Compute the chargeable gain.Data from Example 2On 1 June 1995, Alice bought a
(a) On 1 August 2020, a standard-rated supply is made with a value of £180. Calculate the VAT charged and the consideration for the supply.(b) On 2 January 2021, a standard-rated supply is made for
In June 2020, a standard-rated supply is made at a price of £4,000, plus VAT. The customer is offered a 3% discount if payment is made within 30 days. Calculate the value of the supply and the VAT
Kevin begins trading on 1 January 2019. Taxable turnover during the first two years of trading is as follows:The turnover in January 2020 includes £2,000 relating to the sale of machinery previously
Lindsey is not registered for VAT. In the year to 31 March 2021, she has inputs costing £10,000 plus VAT at 20%. Her outputs total £35,000.(a) How much profit does she make for the year?(b) If she
A standard-rated supply is made in May 2020 at a price of £340, plus VAT. Calculate the VAT chargeable and the consideration for the supply if:(a) no discount is offered(b) a 2% discount is offered
Sanjay began trading on 1 February 2020, selling standard-rated goods and services. He decided not to register for VAT voluntarily. His taxable turnover (excluding VAT) for the first 16 months of
During the quarter to 31 December 2020, Nancy makes supplies as follows:Compute the VAT provisionally payable to HMRC for the quarter. Standard-rated supplies (excluding VAT) Zero-rated supplies
(a) During the quarter to 31 August 2020, Justin makes taxable supplies of £30,000 and exempt supplies of £20,000. Input tax incurred is £1,500. Does he pass either of the two simplified de
The following information relates to the VAT return of Toucan Ltd for the three months to 30 November 2020. All figures are VAT-exclusive unless stated otherwise.(i) Standard-rated supplies made to
Sebastian is self-employed. He drives a car with an emission rating of 173 g/km and he charges the cost of all the petrol used to his business bank account. In the quarter to 31 July 2020, he uses
During the quarter to 31 December 2020, a taxable person makes the following supplies:Input tax for the quarter is £118,000. Of this input tax, 35% is attributed to taxable supplies, 40% is
Tracey is a sole trader. She has the following transactions during the quarter to 31 December 2020 (all amounts shown are VAT-exclusive):Tracey drives a car with an emission rating of 114 g/km and
Tania makes no transfers during 2018-19. Her only transfers during 2019-20 and 2020-21 are as follows:Calculate the value of each of the above transfers after deduction of all the relevant
Consider each of the following lifetime transfers and classify each one as either an exempt transfer, a PET or a chargeable lifetime transfer. Assume in each case that the transfer was made during
On 1 July 2020, Violet makes a chargeable lifetime transfer (after deduction of relevant exemptions) of £48,000. Her only previous chargeable lifetime transfer was made in 2016 and had a gross value
Wilson dies on 20 December 2020, having made only the following transfers during his lifetime:Calculate the IHT payable during Wilson's lifetime (if any) in relation to each of the above transfers,
Toby dies on 2 March 2021, leaving an estate valued at £400,000. None of the transfers made on death are exempt from IHT. Calculate the IHT due on the estate if the total of the gross chargeable
Rose dies on 10 July 2020, leaving an estate valued at £525,000. None of the transfers made on death are exempt from IHT apart from a bequest to the RSPCA (a charity). Rose made no chargeable
Harriet died on 21 October 2020. Her husband had died previously and his estate on death(including transfers made in the last seven years of his life) had absorbed £177,840 of the nil-rate band at
Desmond died on 18 July 2017, having made no transfers in the previous seven years. He left his entire estate to his wife Emily, including the family home valued at £420,000. Emily died on 9 May
On 1 June 2020, Shirley gives 5,000 shares in a listed company to her daughter. Shares in the company are quoted at 189p - 197p on that date, with recorded bargains at 190p, 192p and 196p. Calculate
Phoebe made the following transfers during 2020-21:None of the gifts are regarded as normal expenditure out of income. Phoebe made no transfers at all during 2019-20. Calculate the value of each of
On 5 December 2020, Nicholas makes a gift of £80,000 (after deduction of all relevant exemptions) to a relevant property trust. His only previous chargeable lifetime transfers were in June 2011
On 31 March 2014, Martha gave £500,000 to her daughter as a wedding present. On 1 April 2015 she gave £497,000 to a relevant property trust. Martha died on 1 January 2021, having made only these
On 29 September 2020, Hyacinth makes a transfer consisting of 1,000 shares in a listed company. The shares are quoted at 572p - 588p on that date, with recorded bargains at 572p, 577p and 578p.
On 12 November 2010, Hazel made a gross chargeable transfer to a relevant property trust of £266,000 (after deduction of exemptions). On 1 April 2016 she gave £300,000 to her grandson. These were
Tony died on 11 July 2020, leaving an estate which was valued at £900,000. None of the transfers made on his death were exempt from IHT. He had made the following transfers during his
Peter has had a home in the UK for many years and has always been UK resident. He has worked in the UK throughout his adult life but he retired in December 2019.During tax year 2020-21 he takes a
Vicky's income for 2020-21 consists of her UK salary of £50,270 and rents from overseas property (net of 30% withholding tax) of £3,500. Vicky is UK resident in 2020-21 and she is not a Scottish
In the year to 31 March 2021, a UK resident company had UK trading profits of £5,450,000 and overseas property income (net of 35% withholding tax) of £130,000. Compute the corporation tax liability
A UK company has a trading loss of £50,000 for the year to 31 March 2021. During the year, the company receives overseas property income (net of 40% withholding tax) of £12,000.Show the corporation
In the year to 31 March 2021, a UK company has UK trading profits of £4,800,000 and overseas property income (net of 45% withholding tax) of £2,750,000. Gift Aid donations of £100,000 are made in
(a) Jean-Paul is a Canadian citizen. He owns a house in Canada and regards Canada as his home but he lives in the UK for eight months during tax year 2020-21. During these eight months he tours the
Amy is domiciled in the UK and has lived in the UK all her life. On 1 January 2020 she leaves to work in Australia for two years, returning on 31 December 2021. During her absence she makes no visits
Brist Ltd is a UK resident company which prepares annual accounts to 31 March. In the year to 31 March 2021, the company had a UK trading profit of £2,120,000 and received overseas property income
Donald is resident and domiciled in the UK. He is not a Scottish taxpayer. He has the following income in tax year 2020-21:Donald claims only the personal allowance. Compute the amount of income tax
A UK resident company has 19 subsidiaries, five of which are situated abroad. In the year to 31 March 2021, the company had the following results:None of the dividends received were from any of the
David Deans started trading as a painter and decorator on 1 July 2020. He has notified you of his turnover each month which, up to November 2020, has been as follows:In anticipation of a meeting with
Larry died on 1 November 2020 leaving an estate valued at £300,000. He had never had a wife or civil partner and he left his estate to his best friend. On 1 October 2012 he had set up a
A UK company has the following results for the year to 31 March 2021:Required:Calculate the corporation tax payable for the year. Trading profits Chargeable gains Capital losses brought forward on 1
A Ltd owns 85% of B Ltd and 60% of C Ltd. B Ltd owns 90% of D Ltd. The remaining 40% of C Ltd is owned by E Ltd. All these percentages represent holdings of ordinary shares and all companies are UK
Mrs Lammle, who is registered for VAT, has traded as a manufacturer of standard-rated items since 1 June 2004. She has decided to retire on 31 May 2020, her 65th birthday, and you are asked to
Quiver Ltd is VAT-registered. During the quarter to 31 March 2021, the company made the following supplies of goods and services:The input tax which is attributed to taxable supplies includes £1,710
Jimmy died on 14 February 2021. He had made the following gifts during his lifetime:(1) On 2 August 2019, he made a cash gift of £50,000 to his grandson. This was a wedding present.(2) On 14
P Ltd is the parent company of a small group. All of the companies in the group are UK resident apart from Q Corp., which is resident in an overseas country that is not part of the European Economic
Tolbooth Ltd is a manufacturing company. It commenced trading on 1 April 2019 and prepared its first set of accounts for the 18 month period to 30 September 2020. As the accounting technician
Quadrant Ltd has the following results for its three most recent accounting periods:Notes:1. There were no trading losses brought forward on 1 July 2018.2. Capital losses brought forward on 1 July
AA Ltd, BB Ltd and CC Ltd have the following results for the year to 31 March 2021:None of these companies is a member of a group.Required:(a) Compute each company's corporation tax liability for the
VFD Limited (which is not a group company) has prepared a set of accounts for the ten months to 31 March 2021. These accounts show a net profit before tax of £1,391,540.Relevant information is:(i)
Antietam Ltd makes up accounts to 30 September annually. Results for the 12 months to 30 September 2020 are as follows:The company has capital losses brought forward from previous accounting periods
Undulating Uplands Ltd is a UK resident manufacturing company and is not a member of a group. It had always made up accounts to 31 January but decided to change the year end from January to April.
Q Ltd prepares accounts to 31 March each year. The company made the following two disposals of chargeable assets during the year to 31 March 2021:(1) 1,250 shares in Hentic Ltd were sold on 28 June
For many years, W Ltd has owned 70% of the issued shares of X Ltd, 30% of the issued shares of Y Ltd and 80% of the issued shares of Z Ltd. All four companies are UK resident and all of the shares of
Neil has been in business for many years preparing accounts to 5 April each year. His profits in a typical year (adjusted for tax purposes) are approximately £50,000 and his drawings are £3,000 per
P Ltd has owned 100% of the ordinary shares in S Ltd since 2008. Both companies are UK resident and both prepare accounts to 30 April each year. Results for the most recent two accounting years are
Compute the primary and secondary Class 1 NICs payable in relation to the following employees:(a) A earns £197 for the week ending 26 June 2020.(b) B earns £802 for the week ending 26 June 2020.(c)
Joan is a company director. Her salary is paid on the last day of each month. Her gross salary throughout 2020 was £8,400 per month but she was awarded a 4% pay increase as from 1 January 2021. She
Mark starts his own business on 27 July 2020 and is self-employed for 36 weeks in tax year 2020-21. His trading profit which is assessed to income tax for 2020-21 is £10,590.Calculate the Class 2
Brenda is a company director and she earns a regular monthly salary of £6,000. In December 2020 she received a £20,000 bonus. She is provided with a diesel-engined company car (registered in
Leonard is employed and received a gross salary of £3,447 per month during tax year 2020-21. He also has a small business and paid 52 Class 2 NICs for the year. His trading income for 2020-21 was
Three brothers, Daniel, David and Derrick have been discussing their respective taxation affairs and how much they dislike paying tax. None of them are Scottish taxpayers. Daniel's income for tax
Jeremy, who has been married for many years, was born in 1934 and he receives a retirement pension of £28,000 per annum. He also receives dividend income of £4,500 per annum. In 2007 he purchased
Ae and Bee commenced in partnership on 1 July 2018 preparing accounts to 30 June. Cae joined as a partner on 1 July 2020. Profits have always been shared equally. The partnership’s trading profits
In May 2020 Bernard, a self-employed plumber, and his son Gerald, a self-employed electrician, purchased 1,000 empty barrels from a Scottish whisky distillery. The barrels were over 100 years old and
You are a trainee chartered certified accountant and your manager has asked you for your help with regard to a taxpayer who has made trading losses. Sean has been in self-employment since 2010, but
Roseanne is a Scottish taxpayer. She starts trading on 1 July 2020 and prepares accounts for the 16 months to 31 October 2021. The adjusted trading profit for this period is £38,560. Her only other
Stephen is a UK resident taxpayer with two different sources of income. He works part time as an IT consultant for a small number of clients, on a project management basis. A separate contract is
Claud Chapperon is a self-employed distributor of wholesale clothing who began trading on 1 July 2012. His summarised accounts for the year to 30 June 2020 are shown below.The figures in brackets
Iris (who is single) starts a business on 6 July 2020, preparing accounts to 5 April. Her adjusted trading loss for the nine months to 5 April 2021 is £15,000. However, she is expecting a trading
Joseph Kent started business on 1 July 2018 as a joiner making conservatories. His taxadjusted profits (before deduction of capital allowances) were as follows:Private use of both cars has been
Four taxpayers each make three chargeable disposals during 2020-21. Compute their taxable gains for the year (assuming that there are no unrelieved losses brought forward or carried back) if these
Calculate the amount of CGT payable for 2020-21 by each of the following individuals. In each case, "taxable income" comprises the individual's total income, less reliefs which may be deducted from
Three taxpayers each have £3,000 of capital losses brought forward. Calculate their taxable gains for 2020-21 if their total gains and losses for the year are as follows:(a) Taxpayer A has gains of
Sarah dies on 16 December 2020. She had made net capital losses of £7,300 between 6 April 2020 and the date of her death. Her net gains in the previous three years (and the annual exemption for each
(a) Richard has net gains for 2020-21 of £18,500 and capital losses brought forward of£3,300. Calculate his taxable gains for 2020-21.(b) Richard has unrelieved trading losses (eligible for relief
An individual has capital losses of £2,500 in tax year 2020-21. There are no unrelieved losses brought forward from previous years. Compute the individual's taxable gains for 2020-21 if capital
In 2020-21, an individual has capital gains of £263,000 and allowable losses of £11,400.He has no unrelieved capital losses brought forward from previous years. His taxable income for 2020-21
An individual has capital losses brought forward from previous years amounting to £4,800. Compute the individual's taxable gains for 2020-21 if total gains and losses for the year are as
John dies on 3 March 2021. Between 6 April 2020 and 3 March 2021, he has capital gains of £1,200 and capital losses of £15,400. His net gains in recent tax years (and the annual exemption for each
On what date is CGT for 2020-21 normally due for payment?
Rosemary's capital gains and losses in recent years (and the annual exemption for each year) have been as follows:There were no unrelieved losses to bring forward from 2016-17 or earlier. Compute her
In 2020-21, Ahmed has capital gains of £130,000 and allowable losses of £24,000. He also has capital losses brought forward of £3,700.Ahmed's taxable income for 2020-21 (after deduction of the
Melissa is a sole trader. Her capital gains and capital losses for 2020-21 are £27,000 and £700 respectively. She has capital losses brought forward from 2019-20 of £12,900 and she also has
(a) A chargeable asset was bought in June 2016 for £41,200 and sold in August 2020 for £73,350. Compute the chargeable gain.(b) A chargeable asset was bought for £15,000 in August 2012. Legal
Peter buys a chargeable asset for £26,000 in May 2012. He sells a one-quarter interest in the asset for £12,000 in August 2020, incurring incidental costs of disposal of £500. The value of the
In July 2009, Malcolm bought a piece of land for £40,000. In June 2016 he sold part of the land for £11,000. This disposal was not caused by a compulsory purchase and was his only disposal of land
In September 2014, Gloria acquired 1,000 ordinary shares in a listed company for £7,000. Trading in the shares was suspended in December 2020 and Gloria claimed that the shares then had a negligible
Alan bought a chargeable asset for £2,000 in April 1978. The asset was sold for £29,500 in January 2021. Compute the chargeable gain arising on this disposal if the asset's market value on 31 March
Hilary bought a chargeable asset in November 1978 for £3,000. The asset had a market value on 31 March 1982 of £5,000. She sold part of the asset for £8,000 in November 2020, at which time the
Carol purchased a holiday flat in December 2012 for £100,000. She spent £5,000 on installing central heating in February 2013 and a further £750 on repainting the interior of the flat in March
David was given a chargeable asset in November 2014 at which time the asset had a market value of £7,500. He sold the asset in January 2021. Compute the chargeable gain or the allowable loss if his
Edwina bought a chargeable asset in August 2009 for £240,000, paying acquisition costs of £12,000. In June 2016 she sold a one-quarter interest in the asset for £100,000 and incurred disposal
Francis acquired an oil painting for £11,500 in March 1979. He sold the painting for £87,500 in March 2021. Compute the chargeable gain or allowable loss arising on this disposal if the painting's
In June 2012, Gillian was given shares with a market value at that time of £6,000. In November 2018 she made a successful claim to the effect that these shares now had a negligible value of only
Jon bought a chargeable asset for £23,000 in May 1979. He incurred enhancement expenditure of £10,000 in June 1981 and a further £14,000 in July 1998. The asset was valued at £58,500 on 31 March
Karen bought a house in 1993 for £42,000. In November 1994 she spent £18,000 on dividing the house into two self-contained flats. In September 2018 she sold one of the flats for £95,000, at which
In 2020-21, a taxpayer makes a number of disposals, as listed below. Which of these disposals would be exempt from CGT?(a) An antique table sold for £5,000.(b) A watercolour painting sold at
In December 2020, Michael sells a piece of antique furniture for £6,360, paying incidental disposal costs of £320. He had acquired the furniture in January 2013 as a gift from his mother. Compute
In March 2021, Naomi sells an oil painting which she had acquired many years previously for £10,000. Compute the allowable loss if she sells the painting for:(a) £7,200 (b) £2,700

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