Questions and Answers of Taxation of Individuals

Susan made the following purchases of ordinary shares in Semicycle plc: Date 11 January 2008 20 January 2015 No of shares 1,500 1,140 Cost 4,800 5,700 In January 2018, the company went into
In June 2013, Darren bought 1,000 ordinary shares in Cubson plc for £8,400. In November 2017, Phere plc made a takeover bid for Cubson plc, offering two ordinary shares and one preference share in
On 9 May 2008, Steven bought 2,000 ordinary shares in Vexacon plc for £8,000. On 28 November 2013, he bought 500 ordinary shares in the company for £2,500.In March 2018, Danstreet plc made a
On 1 April 1986, Allan bought a house for £29,000. He lived in the house until 31 October 2015 when he bought another house and made this his principal private residence. The house he had bought in
Mohammed owns two properties - a flat in Central London and a country cottage in Sussex. In general he lives in his London flat during the week and spends the weekends in his Sussex cottage. Which of
On 1 June 1995, Alice bought a house in Derby for £45,000.- She occupied the h ouse as her PPR unti l 1 May 1997 when she left to work in Exeter, living in rented accommodation.- She returned to the
Melanie bought a house on 1 June 1986 for £3 1,000. The house was sold on 31 December 2017 for £173,000. Compute the chargeable gain arising in each of the following cases:(a) Melanie occupied the
Rupert bought a house in Manchester on 1 November 1995 for £75,000. He occupied the house until 1 November 1999 when he left to work abroad for a year, moving back into the house on 1 November 2000.
Alistair bought a house on 1 April 1997 for £125,000 and occupied the entire house as his principal private residence until 1 November 2005. As from that date, he rented the top floor (comprising
Samantha bought a house for £47,500 on 1 August 1996 and occupied the house as her principal private residence. On 1 June 1998 she began to use one -fifth of the house for business purposes.
Ava bought a house on 1 July 1997 for £62,000. She occupied the entire property as her PPR until 1 August 2004 when she began using one-quarter of the house for business purposes. This continued
Terry bought a house for £65,000 on 1 June 1997 and occupied the house as his principal private residence. He lived in the house until 1 June 2003 when he went to stay with relatives in Australia,
In October 2007 , Matthew bought a piece of rare porcelain for £10,000. The porcelain was damaged in early 2013 and in March of that year Matthew spent £3,850 on restoration work. In July 201 3,
In July 2011, Laura bought an oil painting for £120,000. In October 2017, the painting was damaged by fire. In February 2018 , Laura received compensation from her insurance company of £30,000.
In February 2009 , Maria bought a diamond necklace for £13,500. In 2011 the necklace was stolen and, as a result, an insurance payment of £14,000 was received in February 2012. In the same month,
Maurice bought an item of jewellery in Nov ember 2011 for £125,000. In 2017 the jewellery was stolen. As a result, Maurice's insurance company paid him £141,500 in May 2 017. In June 2017 he spent
In September 2008 , Pamela bought a building for business use at a cos t of £150,000. I n September 2017 she sold the building for £261,400 and immediately bought another building, again for
In May 2006 , Janine bought a building for £187,525 for u se in her business. In July 2017 she sold the building for £260,000 and, in the same month, bought another building for use in her
In August 2017, Susannah (a sole trader) gave a business as set to her son. The asset had been bought by Susannah for £91,500 in July 2008 and enhanced in May 2009 at a cost of £34,500. The asset's
In June 2017 , Ian sold a freehold building for £200,000, realising a chargeable gain of £25,000. The building had been used only for trade purposes. In July 2017, he acquired fixed plant and
In January 1981, Norman bought a freehold building for use in his business at a cost of£120,000. The building had a market value on 31 March 1982 of £125,000. In June 2013 he sold the building for
In July 2008 , Kathy paid £60,000 to acquire 90% of the ordinary shares of an unlisted trading company. In May 2015 , she gave all of the shares to her son and both Kathy and her son elected that
Imagine now that Ian (in the above example) buys another freehold building for business use in November 2020 and elects to transfer the held -over gain on the plant and machinery to the new freehold
In May 2012, Ruth sold a freehold building which she had used exclusively for business purposes. The building was sold for £220,000, realising a chargeable gain of £42,500. In the following month,
In March 2018 , Jonathan gives a business asset to his daughter. Jonathan acquired t he asset for £25,000 in May 2012 and its market value on the date of the gift is £60,000. Both Jonathan and his
Calculate the CGT payable in relation to each of the following disposals, assuming in each case that the annual exemption is fully utilised against other gains, that there are no allowable losses and
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
A UK company has a trading loss of £50,0 00 for the year to 31 March 2018 . During the year, the company receives overs eas property income ( net of 40% withholding tax ) of £12,000. Show the
(a) Warren's liability to income tax and Class 4 NICs for tax year 2016 -17 was £17,200, of which £14,500 was paid via PAYE.(i) Compute his POAs for 2017-18 and state the dates on which these fall
In 2010, Shaun bought 20% of the ordinary shares of an unlisted trading company. The shares cost £140,000. He owned the shares until January 2018 when he gave all the shares to a friend. On the date
A manufacturing company has the following results for the year to 31 March 2018: Trading income Income from property Bank interest (amount received) Interest on Government securities (amount
A company produces the following income statement for the year to 31 March 2018:Notes:1. The pr operty was let on 1 January 2018 at a rent of £20,000 per annum, payable annually in advance. The
In November 2017 , Leroy transfers his business to a limited company in exchange for £50,000 in cash and shares which are valued at £600,000. The gain arising on the transfer is £260,000. Leroy
A company's income statement for the year to 31 December 2017 is as follows: Turnover Cost of sales Gross profit Other income Less: Distribution costs Administrative expenses Profit for the year
Three taxpayers each wish to make an ER claim in relation to a qualifying disposal made during 2017-18. Their previous ER claims are as follows:(a) Gemma made an ER claim in relation to a gain of
Calculate the CGT payable in respect of the following disposals, assuming in each case that the annual exemption is fully utilised against other gains, that there are no allowable losses other than
A company's accounts for the 17 months to 30 June 2017 include:The debentures were acquired (not f or trade purposes) on 1 May 2016 . Interest is payable half -yearly on 30 April and 31 October. Show
Identify the accounting periods relating to the following periods of account:(a) year to 30 November 2017(b) 1 October 2016 to 31 July 2017(c) 1 January 2018 to 31 January 2018(d) 33 months to 31
Identify the accounting periods which relate to the following periods of account:(a) Company A prepares accounts for the year to 31 December 2017.(b) Company B prepares accounts for the six months
After deducting capital allowances for the year to 31 December 2016, the tax written down values of a company's plant and machinery were as follows: General pool Special rate pool 112,500 14,700
On 1 January 2018, a company receives gross debenture interest of £1,600 from another UK company and pays net debenture interest of £8,640 to individuals. Explain the corporation tax treatment of
A company prepares accounts to 31 December each year and lets two properties to tenants. The following information relates to the year to 31 December 2017:(a) Property A is owned by the company. The
PCC Ltd is a manufacturing company which prepares accounts to 31 December each year. The company made the following disposals of chargeable assets in the year to 31 December 2017:(i) On 12 September
A company acquired a chargeable asset (not a chattel) in 1979. The asset was sold in December 2017 (RPI 274.7) for £2,800. Compute the chargeable gain or allowable loss if the original cost of the
During the year to 31 March 2018 , a company which qualifies as medium-sized spends£180,000 on research and development . This is qualifying expenditure under the R&D tax relief scheme. Explain the
A company has the following results for the year to 31 March 2018: Trading profits, after capital allowances Bank deposit interest (account opened 1 April 2017): Received 30 June 2017 Received 31
A company makes the following acquisitions of ordinary shares in JKL plc: Date 1 July 1983 2 August 1984 3 February 1997 4 June 2003 No of shares 5,000 2,000 1,200 1,800 Cost 6,300 2,500 2,300 3,400
A company's income statement for the year to 31 March 2018 is as follows:Notes:1) The company acquired £240,000 of 10% debentures (for non -trade purposes) on 1 January 2018. Interest is receivable
A company makes up accounts for th e 21 months to 30 September 2017 . The company's results for this period of account are as follows: Adjusted trading profits (before capital allowances) Non-trade
A company made the following disposals during the year to 31 March 2018:(a) A factory building was sold for £650,000 on 13 June 2017 (RPI 271.1). This building had cost £300,000 in August 2000 (RPI
A company made the following acquisitions of ordinary shares in CDE plc: Date 1 June 1970 30 October 1975 15 August 1981 No of shares 1,000 800 900 Cost 3,000 2,500 3,100 The shares had a market va
A company bought a chargeable asset (not a chattel) in June 2002 (RPI 176.2) for £1,200 and sold the asset in August 2017 (RPI 272.3) for £5,350. Compute the chargeable gain.
A company bought a chargeable asset in November 2000 for £15,000. Enhance ment expenditure was £2,000 in January 2002 and £3,000 in June 2006 . The asset was sold in February 2018 for £48,000.
A company (which is not a member of a group) has the following results for the 14 months to 31 December 2017: Adjusted trading profit, before deduction of capital allowances Capital allowances
Timberlake Ltd prepares accounts to 31 March each year. The company made the following disposals of chargeable assets in the year to 31 March 2018:(i) In February 2018 , a rare Bentley motor car used
A company acquired a chargeable asset for £5,000 in February 2004 (RPI 1 83.8). The asset was sold in January 2018 (RPI 2 75.3). The asset was not a chattel. Compute the chargeable gain or allowable
A company made the following acquisitions of ordinary shares in Rujan plc: Date 15 August 1980 23 January 1997 No of shares 500 600 Cost 1,000 2,500 RPI 154.4 The market value of the shares on 31
A company acquired a chargeable asset for £2,000 in April 1980 and sold the asset for £22,500 in September 2017. Compute the unindexed gain arising on this disposal if the market value of the asset
Calculate the chargeable gain arising on the disposal described in the above example. RPIs are 79.44 for March 1982 and 272.9 for September 2017 .
A company has taxable total profits of £5,000,000 for an accounting period. Explain how the corporation tax liability for this period will be calculated if:(a) the accounting period is the 12 months
A company's taxable total profits for an accounting period are £3,200,000. Compute the corporation tax liability if the accounting period is:(a) the year to 31 March 2017(b) the year to 31 March
Calculate the corporation tax liability of each of the following companies for the accounting period concerned:(a) A01 Ltd has taxable total profits of £800,000 for the year to 31 March
State the date (or dates) on which corporation tax is due for payment in relation to the following periods of account:(a) the year to 31 March 2018(b) the six months to 30 November 2017(c) the 21
A company has the following results for the year to 31 March 2018:The company intends to make Gift Aid donations of £30,000 every six months, starting on 30 November 2017.(a) Compute the company's
A company's share capital consists of 5,000 ordinary shares, held as follows: Sejanus (a manager) Claudius (a director) Agrippa (a director) Cleopatra (a director) Tiberius (a director) Gaius (a
(a) A company prepares a set of accounts for the year to 31 July 2017. When is the corporation tax liability for this period due for payment?(b) A company prepares a set of accounts for the 18
(a) ABC Ltd has taxable total profits of £1,800,0 00 for the year to 31 March 2018 .Taxable total profits were £1,600,000 for the year to 31 March 2017.Calculate the company's corporation tax
A company's issued share capital consists entirely of ordinary shares, held as follows:None of the shareholders are associated in any way.(a) Is the company a close company?(b) Would the company be
In the year to 31 March 2016 , a company incurred a trading loss of £16 0,000 which was carried forward. The company's results for the next two years were: Trading profits Loan interest receivable
A large company has a corporation tax liability of £720,000 for an accounting period. State the dates on which instalments are payable and compute the amount of each instalment if the accounting
A company has the following results for the year to 31 October 2017: Trading loss Income from property Chargeable gains Gift Aid donations (232,300) 190,200 45,540 24,000 Assuming that a claim is
A company (which is not a member of a group) prepares a set of accounts for the year to 30 September 2017. Calculate the corporation tax liability for the year and state the date(or dates) on which
(a) A company calculates its corporation tax liability f or the year to 30 September 2017 as £250,000 and pays this amount on the due date. The correct liabi lity for the year eventually turns out
A company calculates its corporation tax liability for the year to 31 August 2016 as £120,000 and pays this amount on 1 June 2017 . The company's corporation tax return is submitted during August
A company has the following results for the three years to 31 May 2017: Trading profits/(losses) Gift Aid donations W/e 31/5/15 (32,200) 400 We 31/5/16 23,800 500 We 31/5/17 40,300 600 Assuming
A company prepares accounts to 31 July each year. It calculates its corporation tax liability for the year to 31 July 2016 at £180,000 and pays this sum on 1 May 2017. The company is not large for
State the date (or dates) on which a "large" company would be required to settle its corporation tax liability for each of the following accounting periods:(a) the eleven months to 31 May 2018(b) the
A company has the following results for the three years to 31 March 2018: Trading profits/(losses) Loan interest receivable Gift Aid donations yle 31/3/2016 yle 31/3/2017 yle 31/3/2018 36,300
A company has the following results for the three accounting periods to 31 March 2018: Trading profits/(losses) Chargeable gains yle 30/6/16 13,400 1,200 9 months to 31/3/17 69,900 3,500 yle
A company has the following results for the year to 31 December 2017: Trading loss Income from property Chargeable gains Gift Aid donations (112,500) 14,000 103,000 28,700 Assuming that a claim is
A company has the following results for the three years to 31 October 2017: Trading profits/(losses) Income from property Gift Aid donations yle 31/10/15 112,500 3,300 2,000 yle 31/10/16 110,700
A company has the following results for its three most recent accounting periods: Trading profits/(losses) Chargeable gains Gift Aid donations y/e 31/5/16 59,700 8,400 1,000 eight months to 31/1/17
A company has the following results for the four years to 31 March 2018:Calculate the total repayment of corporation tax (with interest) to which the company is entitled, assuming that:(a) all
A company which began trading on 1 April 2015 has no other income apart from its trading profits. Results for the first three accounting periods were as follows: yle 31/3/2016 6 months to 30/9/2016
A company's taxable total profits for the year to 30 June 2017 are £800,000. In the nine months to 31 March 2018 , the company incurs a trading loss of £700,000 and has no other income or gains.
A company's issued share capital consists of 1,000 £1 ordinary shares, held as follows:(a) Is the company a close company?(b) Would the company be a close company:(i) if David were Jacqueline's
Andrew Pearson is a shareholder of Andrew (Nottingham) Ltd. Which of the following(if any) are his associates when deciding whether the company is a close company?(a) his sister(b) his
A company's issued share capital consists entirely of ordinary shares. These shares have been listed on a recognised stock exchange for many years and there have been frequent dealings in them within
On 31 October 2017 , a close company which prepares accounts to 31 March each year provides one of its full-time working directors with:(a) an interest -free loan of £12,000 (the company does not
On 31 August 2017 , a close company provides one of its shareholders with a holiday costing £3,600. This is charged as an expense in the company's income statement for the year to 31 March 2018. The
On 19 April 2017, a c lose company (which makes up accounts to 31 March annually)lends £ 99,400 to Siobhan, who is a director of the company and who owns 30% of its ordinary share capital. The
On 1 May 2017 , a close company which prepares accounts to 31 March each year lends £30,000 to Ravi, who is one of its directors. No interest is charged on this loan. Ravi owns 18% of the company's
Glenda has been self -employed for many years, preparing accounts to 31 March each year. Her adjusted profits (after deduction of capital allowances) are currently running at approximately £80,000
A close company which prepares accounts to 31 March each year is owned and managed by a single shareholder/director who is paid a salary of £5,000 per month. In addition to this salary, the
A Ltd owns 90% of the ordinary share capital of B Ltd and 70% of the ordinary share capital of C Ltd. C Ltd owns 70% of the ordinary share capital of D Ltd.(a) Which companies are related 51% group
Arco1 Ltd and Arco2 Ltd are both 100% subsidiaries of Headco Ltd, which has no other subsidiaries. They are all UK resident. How will the relationship of the three companies affect the way in which
U Ltd has three subsidiaries (one of which is dormant) and has the following results for the year to 31 December 2017: Trading profits Income from property Dividends received from subsidiaries
E Ltd has taxable total profits of £800,0 00 for the year to 31 March 2018 and receives no dividends. The company owns 65% of the ordinary shares of F Ltd and 30% of the ordinary shares of G
Bassnote Ltd is a wholly -owned subsidiary of Apexine Ltd. Both companies are UK resident and prepare accounts to 31 March each year . The results for the year to 31 March 2018 are as follows:
S Ltd has taxable total profits of £120,000 for the six months to 30 September 2017 and receives no dividends. Until 1 June 2017, S Ltd had no related 51% group companies.However, on that date, its

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