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Net profit | 55650 | |
Add back: | ||
Depreciation | 21,830 | |
Parking fines | 70 | |
Gifts to suppliers –
electronic diary | 3,230 | |
Gifts to customers –
chocolates | 2,075 | |
Donations to
conservative party | 800 | |
Lease of motor van | 0 | |
Subscription to
international tailoring magazine | 0 | |
Staff cost | 0 | |
28,005 | ||
Tax adjusted trading
profit before capital allowances | 83,655 |
b)
|
Tax adjusted trading
profit before capital allowances |
83,655 |
|
Less: Capital
allowances |
15,167 |
|
––––––– |
|
|
Tax adjusted trading
profit after capital allowances |
68,488 |
|
======= |
|
|
Opening year rules
apply: |
|
|
Tax year |
Basis of assessment |
|
2019/20 |
Actual (1.8.19 to
5.4.20) |
|
(£15167 x 8/9) |
13,482 |
c)
|
Income tax computation
– 2019/20 |
|||
|
Total |
Non-savings |
Savings |
|
|
£ |
£ |
£ |
|
|
Trading income |
13,482 |
13,482 |
|
|
Employment income |
2,350 |
2,350 |
|
|
Bank interest |
1,560 |
1560 |
|
|
––––––– |
––––––– |
–––––– |
|
|
Total income |
17,392 |
15,832 |
1560 |
|
Less: PA |
12,500 |
12,500 |
|
|
––––––– |
––––––– |
–––––– |
|
|
Taxable income |
4,892 |
3,332 |
1560 |
|
======= |
======= |
====== |
|
|
Income tax: |
£ |
||
|
£ |
|||
|
4892 at 20%
(Non-savings income) |
666 |
||
|
1,000 at 0% (Savings)
(SNRB) (Note) |
0 |
||
|
160 at 20% (Savings) |
32 |
||
|
–––––– |
|||
|
4,892 |
|||
|
====== |
–––––– |
||
|
Income tax liability |
6,336 |
||
|
Less: PAYE |
-1,100 |
||
|
–––––– |
|||
|
Income tax |
5,236 |
||
|
====== |
The travel expenses include parking fines of £560
incurred by Sinead whilst picking up goods at the food warehouse.
|
Chargeable gain –
Factory unit |
|
|
£ |
|
|
Sale proceeds (March
2019) |
425,000 |
|
Less: Incidental costs
of sale |
4,240 |
|
––––––– |
|
|
Net sale proceeds |
420,760 |
|
Less: Cost (June 2000) |
166,930 |
|
Extension cost (August
2013) |
48,600 |
|
–––––––– |
|
|
Unindexed gain |
205,230 |
|
Less: Indexation
allowance to December 2017 |
|
|
On original cost |
|
|
(278.1 – 171.1)/171.1
= 0.625 x £166930 |
104,331 |
|
On extension |
|
|
(278.1 – 251.0)/251.0
= 0.108 x £48600 |
5,249 |
|
–––––––– |
|
|
Chargeable gain before
considering rollover relief |
95,650 |
|
Tax adjusted trading
profit before CAs |
||
|
(£1,709,600 x 12/16 :
5/16) |
1,282,200 |
534,250 |
|
Less: Capital
allowances |
186,806 |
426,268 |
|
–––––––– |
–––––––– |
|
|
Trading income |
1,095,394 |
107,982 |
|
Interest income |
2,200 |
1,000 |
|
Property income |
37,200 |
15,500 |
|
Net chargeable gains |
||
|
(£95650 (part (a)(i))
– £5840 capital loss b/f) |
– |
97,036 |
|
–––––––– |
–––––––– |
|
|
Total profits |
1,134,794 |
124,482 |
|
Less: Qualifying
charitable donations |
6,000 |
– |
|
–––––––– |
–––––––– |
|
|
Taxable total profits
(TTP) |
1,128,794 |
124,482 |
|
======== |
======== |
|
|
Corporation tax (Note
7) |
||
|
FY2017/FY2018
(£1,062,418 x 19%) |
201,859 |
|
|
======== |
||
|
FY2018/FY2019
(£193,778 x 19%) |
36,818 |
|
|
======= |
||
|
Due date for payment |
1.10.2019 |
1.3.2020 |
Question
No. 3
|
Salary (3/12) |
1,125 |
– |
1,125 |
|
Interest |
1,263 |
788 |
475 |
|
Balance (60%/40%) |
31,487 |
18,892 |
12,595 |
|
––––––– |
|||
|
3 months profits
(£135,500 x 3/12) |
33,875 |
||
|
––––––– |
|||
|
1.11.19 to 31.7.20 (9
months) |
|||
|
Salary (9/12) |
18,750 |
– |
7,500 |
|
Interest |
5,099 |
2,362 |
1,425 |
|
Balance (50%/30%/20%) |
77,776 |
38,888 |
23,333 |
|
––––––– |
|||
|
9 months profits
(£135,500 x 9/12) |
101,625 |
||
|
––––––– |
––––––– |
––––––– |
––––––– |
|
Share of profits for
y/e 31.7.20 |
135,500 |
60,930 |
46,453 |
Question
No. 4
Consequences
of registering
• Certificate of registration issued and allocated a
VAT registration number
• Allocated a tax period for accounting (quarterly)
• Charge VAT on taxable elements on invoices and quote
registration wide variety
• Can get better enter VAT on purchases and expenses
• Keep appropriate VAT information
(b)
Consequences of registering past due
• If fail to sign up on time, whilst registered:
– must pay all of the VAT due from the date have to
have registered
– Unlikely if you want to move lower back to clients
and fee them looking back
• Penalty may be payable depending on whether or not
did no longer check in on cause
(i.E. Deliberate or real error) and whether or not
disclosure changed into induced or unprompted
(c)
Annual accounting scheme
• Instead of paying VAT quarterly, bills are unfold
frivolously as follows:
– Nine fixed bills on account (POA) in months 4 to
twelve inclusive
– Each POA = 10% of the VAT for final 12 months
(or 10% x estimated liability if a brand new
enterprise and no preceding 12 months)
– Balancing payment = (Total legal responsibility for
the year much less the none POAs)
Due
2 months after the end of the yearly VAT duration
•
Advantages:
– Can manage cash flow as making normal constant
payments and paying nearly every month (in preference to potentially
fluctuating amounts each region)
– Less management as most effective one VAT return is
needed and is due 2 months after the stop of the once a year VAT period
•
Conditions:
– Committed no VAT offences in previous twelve months
– Taxable turnover (standard-rated, 0-rated, however
except capital income) should now not exceed £1.35 million
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