Financial Act 2009

8/14/2019 Financial Act 2009

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This article looks at the changes made by the

Finance Act 2009, and should be read by studentswho are taking Papers F6 (UK) or P6 (UK), or CATPaper 9 (UK) at either the June or December 2010sittings. The aim of the article is to summarise thechanges made by the Finance Act 2009 and to lookat the more important changes in greater detail.The article also includes details of legislation thatwas enacted prior to the Finance Act 2009, but hasonly come into effect from 6 April 2009.

Please note that if you are sitting Papers F6 (UK)

or P6 (UK), or CAT Paper 9 (UK) in December 2009,you will be examined on the Finance Act 2008,which is the legislation as it relates to the tax year200809. Therefore this article is not relevant toyou, and you should instead refer to the FinanceAct 2008 article published on the ACCA website atwww.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_jj08_financeact.pdf

PaPer F6 (UK)

INCOME TAXRate o income taxThe rates for the tax year 200910 are as follows:Basic rate 1 to 37,400 20%Higher rate 37,401 and above 40%

A starting rate of 10% applies to savings incomewhere it falls within the first 2,440 of taxableincome. If non-savings income exceeds 2,440 the

starting rate of 10% for savings does not apply. Inthis case savings income is taxed at the basic rateof 20% if it falls below the higher rate thresholdof 37,400, and at the higher rate of 40% if itexceeds the threshold.

Dividends are taxed at the lower rate of 10%if they fall below the higher rate threshold of37,400, and at the higher rate of 32.5% wherethey exceed the threshold.

Per ona a o ance

Personal allowances for the tax year 200910 areas follows:

Personal allowance Standard 6,475Personal allowance 6574 9,490Personal allowance 75 and over 9,640Income limit for age-related allowances 22,900

Examp e 1For the tax year 200910 Ingrid, aged 40, has a

salary of 37,000, building society interest of 800(net) and dividends of 9,000 (net). Her income taxliability is as follows:

Employment income 37,000Building society interest (800 x 100/80) 1,000Dividends (9,000 x 100/90) 10,000 10,000

48,000Personal allowance (6,475)

10,000Taxable income 41,525 10,000

Income tax: 31,525 at 20% 6,3055,875 at 10% 5874,125 at 32.5% 1,341

10,000Tax liability 8,233 10,000

The starting rate of 10% for savings income isnot applicable because the non-savings income(37,000 - 6,475 = 30,525) exceeds 2,440.

Finance act

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Examp e 2

For the tax year 200910, Ali, aged 67, haspensions of 10,800 and bank interest of 4,000(net). Her income tax liability is as follows:

Pensions 10,800Bank interest (4,000 x 100/80) 5,000 10,000

15,800Personal allowance (9,490) 10,000

Taxable income 6,310 10,000 Income tax: 1,310 at 20% 262

1,130 at 10% 1133,870 at 20% 774

10,000Tax liability 1,149 10,000

Non-savings income is 1,310 (10,800 - 9,490),so 1,130 (2,440 - 1,310) of the savingsincome is taxed at the starting rate of 10%. Theremainder of the savings income is taxed at thebasic rate of 20%.

Examp e 3For the tax year 200910 Lorn, aged 80, haspensions of 22,000 and building society interestof 3,200 (net). Her income tax liability is

as follows: Pensions 22,000Building society interest (3,200 x 100/80) 4,000 10,000

26,000Personal allowance (8,090) 10,000Taxable income 17,910 10,000

Income tax: 17,910 at 20% 3,582 10,000Tax liability 3,582 10,000

Lorns total income exceeds 22,900, so her

personal allowance of 9,640 is reduced to8,090 (9,640 - 1,550 (26,000 - 22,900 =3,100/2)).

The starting rate of 10% for savings income isnot available because the non-savings income(22,000 - 8,090 = 13,910) exceeds 2,440.

In ivi a savin Acco nt (IsA )For the tax year 200910 individuals aged 50and over can invest up to 5,100 in a cash

ISA, and up to 10,200 in a stocks and sharesISA. This is subject to an overall investment limitof 10,200. Therefore, if 5,100 is invested ina cash ISA only 5,100 can be invested in a stocksand shares ISA.

For individuals aged under 50 the investmentlimits for the tax year 200910 are unchanged. Theoverall investment limit is 7,200, of which 3,600can be invested in a cash ISA.

The income from ISAs is exempt from income

tax, while a capital gain made within a stocks andshares ISA is exempt from capital gains tax.

Emp o ment incomeCompany car beneft For the tax year 200910 the base level of CO 2emissions used to calculate company car benefits isunchanged at 135g per kilometre.

The percentage used to calculate a car benefitranges from 15% to 35%. However, a lower rate

of 10% applies to motor cars with a CO 2 emissionrate of exactly 120g per kilometre or less. Thislower rate is increased to 13% (10% + 3%) fordiesel cars.

Examp e 4During the tax year 200910 Fashionable plcprovided the following employees with companymotor cars:

Amanda was provided with a new diesel poweredcompany car on 6 August 2009. The motor car hasa list price of 13,500 and an official CO 2 emissionrate of 122g per kilometre. P

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Betty was provided with a new petrol-poweredcompany car throughout the tax year 200910. Themotor car has a list price of 16,400 and an officialCO2 emission rate of 193g per kilometre.

Charles was provided with a new petrol-poweredcompany car throughout the tax year 200910. Themotor car has a list price of 22,600 and an officialCO2 emission rate of 254g per kilometre. Charlespaid Fashionable plc 1,200 during the tax year200910 for the use of the motor car.

Diana was provided with a new petrol-poweredcompany car throughout the tax year 200910. Themotor car has a list price of 12,400 and an officialCO2 emission rate of 118g per kilometre.

Aman aThe CO 2 emissions are below the base level figureof 135g per kilometre, so the relevant percentage is18% (15% plus a 3% charge for a diesel car). The

motor car was only available for eight months of thetax year 200910, so the benefit is 1,620 (13,500x 18% x 8/12).

bettThe CO 2 emissions are above the base level figureof 135g per kilometre. The CO 2 emissions figure of193 is rounded down to 190 so that it is divisible byfive. The minimum percentage of 15% is increasedin 1% steps for each 5g per kilometre above the

base level, so the relevant percentage is 26% (15%+ 11% (190 - 135 = 55/5)). The motor car wasavailable throughout the tax year 200910 so thebenefit is 4,264 (16,400 x 26%).

C ar eThe CO 2 emissions are above the base level figureof 135g per kilometre. The relevant percentage is38% (15% + 23% (250 - 135 = 115/5)), but thisis restricted to the maximum of 35%. The motor

car was available throughout the tax year 200910so the benefit is 6,710 (22,600 x 35% = 7,910 -1,200). The contributions by Charles towards theuse of the motor car reduce the benefit.

dianaThe CO

2emissions are below 120g per kilometre, so

the lower rate of 10% applies. The motor car wasavailable throughout the tax year 200910, so thebenefit is 1,240 (12,400 x 10%).

Company car e beneft The fuel benefit is calculated as a percentage ofa base figure that is announced each year. For thetax year 200910 the base figure is unchanged at16,900.

The percentage used in the calculation is exactlythe same as that used for calculating the relatedcompany car benefit.

Examp e 5Continuing with Example 4 .

Amanda was provided with fuel for private usebetween 6 August 2009 and 5 April 2010.

Betty was provided with fuel for private use between6 April 2009 and 31 December 2009.

Charles was provided with fuel for private usebetween 6 April 2009 and 5 April 2010. He paidFashionable plc 600 during the tax year 200910towards the cost of private fuel, although the actualcost of this fuel was 1,000.

Diana was not provided with fuel for private use.

Aman aThe motor car was only available for eight monthsof the tax year 200910, so the fuel benefit is2,028 (16,900 x 18% x 8/12).

bettFuel was only available for nine months of the taxyear 200910, so the fuel benefit is 3,295 (16,900x 26% x 9/12).

C ar eThe motor car was available throughout the taxyear 200910 so the benefit is 5,915 (16,900 x

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35%). There is no reduction for the contributionsmade, since the cost of private fuel was notfully reimbursed.

dianaFuel was not provided for private use so there is nofuel benefit.

O fcia rate o intere t The official rate of interest is used when calculatingthe taxable benefit arising from a beneficial loan or

from the provision of living accommodation costingin excess of 75,000.For the June and December 2010 sittings the

actual official rate of interest of 4.75% for the taxyear 200910 will be used.

Capita a o anceFir t-year a owanceFor a period of one year only, a first-year allowanceof 40% has been introduced. The new allowance

will apply to expenditure during the period 6 April2009 to 5 April 2010 (1 April 2009 to 31 March2010 for limited companies).

The annual investment allowance alreadyprovides a first-year allowance of 100% for the first50,000 of expenditure on plant and machinery,so the first-year allowance of 40% is only relevantwhere expenditure exceeds 50,000. The first yearallowance of 40% is not available for expenditureon motor cars or on expenditure that is included in

the 10% special rate pool.Motor carThere have been a number of changes as regardsthe allowances available in respect of expenditureon motor cars.

The changes apply from 6 April 2009 (1 April2009 for limited companies).

There is no longer any restriction to the amountof writing-down allowance that can be claimed

in respect of an expensive motor car. Previously,there was a 3,000 restriction. Instead, the rateof writing-down allowance for a motor car nowdepends on its CO 2 emissions:

Motor cars with CO 2 emissions of between 111and 160g per kilometre qualify for writing-downallowances at the rate of 20% on the fullpurchase price.

Motor cars with CO 2 emissions of more than160g per kilometre only qualify for writing-downallowances at the rate of 10%.

The 100% first-year allowance continues to beavailable in respect of low emission motor carswith CO 2 emissions of 110g per kilometre or less.

Unless there is private use, motor cars qualifyingfor writing-down allowances at the rate of 20%are included in the general pool, while motor carsqualifying for writing-down allowances at the rateof 10% are included in the special rate pool. Motorcars with private use (by a sole trader or partner)are not pooled, but are kept separate so that theprivate use adjustment can be calculated.

The treatment of motor cars already owned at6 April 2009 (1 April 2009 for limited companies)

is to remain unchanged for a period of five years.Therefore no adjustment is necessary for any motorcars already included in the general pool. Motorcars costing more than 12,000 or those withprivate use will continue to be kept separately, andwill qualify for writing-down allowances at the rateof 20% restricted to a maximum of 3,000. This isregardless of a motor cars CO 2 emissions.

Although the treatment of motor cars alreadyowned at 6 April 2009 (1 April 2009 for companies)

is examinable, a question will not be set involvingthe purchase of a motor prior to this date.The new capital allowance rules specifically

exclude motorcycles, and expenditure onthese therefore qualifies for the annualinvestment allowance.

The capital allowances information that will begiven in the tax rates and allowances section ofthe exam paper for the June and December 2010sittings is as follows:

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Rate o a o ance %Plant and machinery General pool first-year allowance 40

writing-down allowance 20Special rate pool 10(The first-year allowance of 40% applies toexpenditure during the period 6 April 2009 to 5April 2010 (1 April 2009 to 31 March 2010 forlimited companies).)Motor carsCO

2emissions up to 110g per kilometre 100

CO2 emissions between 111 and 160gper kilometre 20CO2 emissions over 160g per kilometre 10

Annual investment allowanceFirst 50,000 of expenditure 100

Previously, you were told when a motor car was lowemission. From the June 2010 sitting onwards you

will only be given a motor cars CO 2 emissions.Examp e 6Ming prepares accounts to 5 April. On 6 April 2009the tax written down values of plant and machinerywere as follows: General pool 16,700Expensive motor car 18,800

The following transactions took place during theyear ended 5 April 2010: Cost/

(Proceeds) 12 May 2009 Purchased equipment 61,4008 June 2009 Purchased motor car (1) 28,3002 August 2009 Purchased motor car (2) 11,60019 October 2009 Purchased motor car (3) 16,8004 November 2009 Purchased motor car (4) 10,100

2 April 2010 Sold motor car (4) (8,300)

Motor car (1) purchased on 8 June 2009 for28,300 has CO

2emissions of 140g per kilometre.

Motor car (2) purchased on 2 August 2009 for11,600 has CO 2 emissions of 155g per kilometre.This motor car is used by Ming, and 15% of themileage is for private journeys. Motor car (3)purchased on 19 October 2009 for 16,800 hasCO2 emissions of 105g per kilometre. Motor car (4)purchased on 4 November 2009 for 10,100 hasCO2 emissions of 185g per kilometre.

Table 2 on page 14 shows Mings capitalallowance claim for the year ended 5 April 2010.

In tria b i ing a owanceCapital allowances for industrial buildings are beingphased out. This is being achieved by an annual25% reduction in the amount of allowance availableover a four-year period. For the tax year 200910(the financial year 2009 for limited companies)the writing-down allowance is therefore reducedfrom 3% to 2% where a new industrial building is

acquired or where an existing industrial buildingcontinues to be owned.Where a limited companys chargeable period

falls into two financial years then apportionmentwill be necessary in order to determine the rate ofwriting-down allowance applicable. A question willnot be set involving apportionment.

Examp e 7Scuba Ltd makes up its accounts to 31 March. The

company purchased a new factory from a builderon 1 July 2009 for 240,000 (excluding thecost of land), and this was immediately broughtinto use.

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li etime a owanceThe lifetime allowance for the tax year 200910 hasbeen increased to 1,750,000.

The lifetime allowance applies to the total fundsthat can be built up within a persons pensionschemes. Where the limit is exceeded there willbe an additional tax charge when that personsubsequently withdraws the funds in the form ofa pension.

Anti- ore ta ing provi ionThe government has announced that from 6 April2011 tax relief for pension contributions madeby high income taxpayers is to be restricted. Toprevent such taxpayers making excessive pensioncontributions prior to the change coming into effect,anti-forestalling provisions have been introduced.For high-income taxpayers these provisions restricttax relief where excessive pension contributionsare made. The anti-forestalling provisions are notexaminable , and you should therefore assume inany exam question involving pension contributionsthat the contributions are not excessive.

Examp e 10For the tax year 200910 Frank had trading profitsof 360,000 and made gross personal pensioncontributions of 260,000.

Frank has earnings of 360,000 for the tax year200910. All of the contributions of 260,000therefore qualify for tax relief, and he will have paid

208,000 (260,000 less 20%) to the personalpension company. Higher rate tax relief will begiven by extending Franks basic rate tax bandfor the tax year 200910 to 297,400 (37,400 +260,000). However, there will be a tax charge at therate of 40% on the excess of contributions abovethe annual allowance of 245,000. His income taxliability for the tax year 200910 is as follows:

Trading profit 360,000Personal allowance (6,475) 353,525Taxable income 353,525 353,525

Income tax: 297,400 at 20% 59,48056,125 at 40% 22,450

353,52581,930

Excess contribution charge15,000 (260,000 - 245,000)at 40% 6,000

353,525Tax liability 87,930 353,525

CORPORATION TAXRate o corporation taxThe small company rate of corporation tax andthe full rate of corporation tax for the financialyear 2009 are unchanged at 21% and 28%, as arethe lower and upper limits. The corporation taxrates for the financial year 2009 can therefore besummarised as follows:

Level of profits Effective rateUp to 300,000 21%300,001 to 1,500,000 29.75%Over 1,500,000 28%

The corporation tax information that will be givenin the tax rates and allowances section of the exampaper for the June and December 2010 sittings isas follows:

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Financial year 2007 2008 2009Small companies rate 20% 21% 21%Full rate 30% 28% 28%

Lower limit 300,000 300,000 300,000Upper limit 1,500,000 1,500,000 1,500,000

Marginal relieffraction 1/40 7/400 7/400

Examp e 11For the year ended 31 March 2010 Easy Ltd hasprofits chargeable to corporation tax of 40,000and FII of 10,000.

For the year ended 31 March 2010 DifficultLtd has profits chargeable to corporation tax of600,000 and FII of 50,000.

Ea ltCorporation tax is 8,400 (40,000 at 21%) as theprofits of 50,000 (40,000 + 10,000) are lessthan 300,000.

di c t ltMarginal relief applies as the profits of 650,000(600,000 + 50,000) are between 300,000 and1,500,000. The companys corporation tax liabilityis as follows:

600,000 at 28% 168,000Marginal relief

7/400 (1,500,000 - 650,000) x 600,000/650,000 (13,731)

353,525Liability 154,269 353,525

Corporation Tax Act 2009The government is in the process of rewritingtax law into plain English. The latest sectionof legislation to be rewritten covers the basic

provisions of the charge to corporation tax. Thisnew rewritten legislation has been published as theCorporation Tax Act 2009.

Although the new legislation does not in any waychange existing legislation, it has introduced newplain English terminology. Since this terminologyis already in use for Paper F6 (UK) no changesare necessary.

lo re ie A trading loss can normally be carried back andset against profits of the preceding 12 months. Forloss-making accounting periods ending between 24November 2008 and 23 November 2010 this reliefis extended to 36 months.

The extended relief is exactly the same as thatgiven for terminal losses, with one importantdifference in that the extended loss relief isrestricted to a maximum of 50,000. The 50,000limit is apportioned if a loss-making periodis shorter than 12 months. For example, for anine-month loss-making period the extended reliefis restricted to a maximum of 37,500 (50,000x 9/12). The 50,000 restriction only applies tolosses carried back outside the normal 12-monthcarry back period.

As with relief for terminal losses, where extendedrelief is claimed losses are carried back in order,most recent periods first.

The following information will be given in the taxrates and allowances section of the exam paper forthe June and December 2010 sittings:

Exten e o re ie Extended loss relief is capped at a maximum of50,000. For limited companies it applies toloss-making accounting periods ending between24 November 2008 and 23 November 2010.

EXAMPlE 12Table 3 on page 15 shows Loser Ltds results.

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Over ea ivi enThere has been a major reform to the treatment ofoverseas dividends. As far as Paper F6 is concernedall overseas dividends are now exempt from UKcorporation tax.

Exempt overseas dividends are included as frankedinvestment income in exactly the same way as UKdividends, unless they are group income. In this casethey are completely ignored for tax purposes.

Although this change in treatment only appliesto overseas dividends received on or after 1 July2009, a question will not be set where an overseasdividend is received between 1 April 2009 and30 June 2009.

Since overseas dividends are now exempt fromUK corporation tax, double taxation relief forunderlying tax is no longer examinable . However,double taxation relief could still be examined wherethere are profits from an overseas branch.

New rules have also been introduced that restrictthe amount of interest that is deductible whencalculating profits chargeable to corporation tax,but these rules are not examinable .

Examp e 13During the year ended 31 March 2010 Various Ltdreceived an overseas dividend of 67,500 (net).Withholding tax was withheld from the dividend atthe rate of 15%.

1 If Various Ltd owns 50% or less of the votingpower of the overseas company, then the overseasdividend will be exempt from UK corporation taxbut included as franked investment income. Theamount of franked investment income is 75,000(67,500 x 100/90).

2 If Various Ltd owns more than 50% of the votingpower of the overseas company, then the dividendwill be exempt from UK corporation tax and notincluded as franked investment income. This isbecause the overseas dividend is group income.

CAPITAl gAINs TAXIn ivi a exemption imitThe annual exemption limit for the tax year200910 has been increased from 9,600 to10,100.

Rate o capita ain taxFor the tax year 200910 the rate of capitalgains tax is unchanged at 18%. This rate is usedregardless of the amount of taxable gains ortaxable income. However, on the first 1m ofgains qualifying for entrepreneurs relief during ataxpayers lifetime the effective capital gains taxrate is 10%, since these gains are reduced by afactor of 4/9ths (18% less 4/9ths = 10%).

Examp e 14Michael made the following disposals during the taxyear 200910: On 30 June 2009 Michael sold a business that he

had run as a sole trader since 1 January 2003.The sale resulted in the following capital gains:

Goodwill 260,000Freehold office building 370,000Freehold warehouse 170,000 353,525

800,000 353,525

The assets were all owned for more than one yearprior to the date of disposal. The warehouse hadnever been used by Michael for business purposes.

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On 25 January 2010, Michael sold a 30%shareholding in Green Ltd, an unquoted tradingcompany. The disposal resulted in a capital gainof 450,000. Michael had owned the sharessince 1 March 2004, and was an employeeof the company from that date until the dateof disposal.

During the tax year 200809 Michael made adisposal against which he claimed 46,000 ofentrepreneurs relief.

Michaels capital gains tax liability for the tax year200910 is as follows:

Goodwill 260,000Freehold office building 370,000 353,525

630,000Entrepreneurs relief(630,000 x 4/9ths) (280,000) 353,525 350,000

Freehold warehouse 170,000 Shareholding in Green Ltd 450,000Entrepreneurs relief(324,000 x 4/9ths) (144,000) 353,525 306,000 353,525

826,000Annual exemption (10,100) 353,525

815,900 353,525

Capital gains tax: 815,900 at 18% 146,862 353,525

Entrepreneurs relief of 46,000 was utilisedduring the tax year 200809, and a fur ther630,000 is utilised on the disposal of Michaelssole tradership. Therefore, 324,000 (1,000,000 -46,000 - 630,000) is available when the shares inGreen Ltd are disposed of.

NATIONAl INsuRANCE CONTRIbuTIONsC a 1 an C a 1A Nationa In rance contri tionFor the tax year 200910, the rates of employeeClass 1 NIC are unchanged at 11% and 1%. Therate of 11% is paid on earnings between 5,715per year and 43,875 per year, and the rate of 1%is paid on all earnings over 43,875 per year.

The rate of employers Class 1 NIC is unchangedat 12.8%, and is paid on all earnings over 5,715per year.

The rate of Class 1A NIC that employers payon taxable benefits provided to employees is alsounchanged at 12.8%.

The Class 1 and Class 1A NIC information thatwill be given in the tax rates and allowances sectionof the exam paper for the June and December 2010sittings is as follows:

%Class 1 Employee 15,715 per year Nil

5,71643,875 per year 11.043,876 and above per year 1.0

Class 1 Employer 15,715 per year Nil5,716 and above per year 12.8

Class 1A 12.8

Examp e 15Simone Ltd has one employee who is paid 50,000per year, and was provided with the followingtaxable benefits during the tax year 200910: Company motor car 6,400Car fuel 5,070Living accommodation 1,800

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u N C h A N g E d A T 1 1 % A

N d 1 %

. T h E R A T E O F 1 1 % I s P A I d O N E A R N I N g s b E T w E E N

5 , 7 1 5

P E R y E A R A N d 4 3 , 8 7 5 P E R y E A R

, A N d T h E R A T E O

F 1 % I s P A I d O N

A l l

E A R N I N g s O V E R 4 3 , 8 7 5 P E R y E A R .



11/21

The Class 1 and Class 1A NIC liabilities are as follows:

Employee Class 1 NIC43,875 - 5,715 = 38,160 at 11% 4,19850,000 - 43,875 = 6,125 at 1% 61

4,1984,2594,198

Employers Class 1 NIC50,000 - 5,715 = 44,285 at 12.8% 5,668

4,198Employers Class 1A NIC

13,270 (6,400 + 5,070 + 1,800) at 12.8% 1,699 4,198

C a 2 an C a 4 Nationa In rance contri tionFor the tax year 200910 the rate of Class 2 NIChas been increased to 2.40 per week. The ratesof Class 4 NIC are unchanged at 8% and 1%. Therate of 8% is paid on profits between 5,715 and43,875, and the rate of 1% is paid on all profitsover 43,875. The Class 4 NIC information that willbe given in the tax rates and allowances section ofthe exam paper for the June and December 2010sittings is as follows:

%Class 4 15,715 per year Nil

5,71643,875 per year 8.043,876 and above per year 1.0

Examp e 16Jimmy is a self-employed builder and Jenny is aself-employed consultant. Their trading profits forthe tax year 200910 are respectively 25,000 and50,000. Class 4 NIC liabilities for the tax year200910 are as follows:

Jimmy 25,000 - 5,715 = 19,285 at 8% 1,543 4,198

Jenny 43,875 - 5,715 = 38,160 at 8% 3,05350,000 - 43,875 = 6,125 at 1% 61

4,1983,114

4,198

VAluE AddEd TAXRe i tration an ere i tration imitThe limit of annual turnover above which VATregistration is compulsory has been increased from67,000 to 68,000, and the deregistration limithas been increased from 65,000 to 66,000.

stan ar rate o VATUntil 31 December 2009 the standard rate ofVAT has been temporarily reduced from 17.5% to15%. From 1 January 2010 the standard rate willrevert back to 17.5%. Because of this change thefollowing additional information will be given underthe VAT heading in the tax rates and allowancessection of the exam paper for the June andDecember 2010 sittings:

Standard rate up to 31 December 2009 15.0% from 1 January 2010 onwards 17.5%

A question will not be set involving a VAT periodthat spans 31 December 2009.

Examp e 17Gwen is in the process of completing her VAT returnfor the quarter ended 30 November 2009; thefollowing information is available: Sales invoices totaling 128,000 were issued in

respect of standard rated sales. Standard rated purchases of materials amounted

to 32,400. Standard rated expenses amounted to 24,800. On 15 November 2009 Gwen purchased

machinery at a cost of 24,150. This figure isinclusive of VAT.

Unless stated otherwise all of the above figures areexclusive of VAT.

u N T I l

3 1 d E C E M b E R 2 0 0 9 T h E s T A N d A R d R A T E O F V A T h A s b E E N T E M P O

R A R I l y

R E d u C E d F R O M 1 7

. 5 %

T O 1 5 %

. F R O M 1 J A N u A R y 2 0 1 0 T h E s T A N d A R d R A T E w I l l R E V E R T

b A C k T O 1 7

. 5 %

.

11 TEChNICAl


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VAT ret rn q arter en e 30 Novem er 2009 Output VATSales (128,000 x 15%) 19,200

Input VATMaterials (32,400 x 15%) 4,860Expenses (24,800 x 15%) 3,720Machinery (24,150 x 15/115) 3,150 4,198 (11,730) 4,198VAT payable 7,470 4,198

TAX MANAgEMENTse -a e ment pa ment on acco ntThe de minimis limit for self-assessment paymentson account has been raised to 1,000. Therefore forthe tax year 200910, payments on account are notrequired if the tax liability for the tax year 200809was less than 1,000 or if more than 80% of thetax liability for that year was deducted at source.

Pena tie or ai re to noti a ne taxa e activitThe single penalty regime that has been introducedfor incorrect returns has been extended to where ataxpayer fails to notify HM Revenue & Customs of anew taxable activity, or where the taxpayer is late indoing so.

The amount of penalty is based on the tax duebut unpaid as a result of the failure to notify,but the actual penalty payable is linked to thetaxpayers behaviour: There will be no penalty where a taxpayer has a

reasonable excuse for the failure to notify. There will be a penalty of 30% of the tax unpaid

where there is non-deliberate failure to notify. There will be a penalty of 70% of the tax

unpaid where there is deliberate failure to notify,and this is increased to 100% where there isalso concealment.

However, a penalty will be substantially reducedwhere a taxpayer makes disclosure, especially whenthis is unprompted by HM Revenue & Customs.

Appea proce rePreviously, tax appeals by taxpayers were heard byeither the General Commissioners or the SpecialCommissioners, and VAT appeals were heard by VATtribunals. This system has been replaced by a newtribunal system. One new feature is that before anappeal is heard by a tribunal there is now the optionfor a taxpayer to request a review of a decision by aHM Revenue & Customs review officer.

If an appeal does go to a tribunal then a case willbe allocated to one of four tracks depending on theissues and tax at stake: The paper track will hear the simplest appeals,

such as an appeal against a fixed penalty, andthe case will normally be decided by the tribunalwithout a hearing.

The basic track will involve a hearing but theexchange of documents beforehand will be keptto a minimum.

The standard track will involve cases that aresubject to more detailed case managementand formality.

The complex track will be for long or complexcases, or those that involve an important principleor a large financial sum.

The new tribunal system consists of a first-tiertribunal and an upper tribunal. The first-tier tribunalwill deal with all but the most complex of cases.The upper tribunal will deal with the more complexcases, and also hear appeals against the decisionsof the first-tier tribunal.

In ormation an in pection po erA new single regime of HM Revenue & Customsinformation and inspection powers has beenintroduced. This new regime covers income tax,capital gains tax, corporation tax, VAT and PAYE.

T h E s I N g l E P E N A l T y R E g I M E T h A T h A s b E E N I N T R O d u C E d F O R I N C O R R E C T

R E T u R N s h A s b E E N E X T E N d E d T O w h E R E A T A X P A y E R F A I l s T O N O T I F y

h M R E V E N u E & C u s T O

M s O F A N E w

T A X A b l E A C T I V I T y

, O R w h E R E

T h E T A X P A y E R I s l A T E I N d O I N g s O

.



13/21

HM Revenue & Customs can request informationfrom taxpayers by making a written informationnotice. Requests to third parties for informationmust normally either be agreed by the taxpayer orapproved by the first-tier tribunal.

HM Revenue & Customs also has new powers toenter and inspect a taxpayers business premises inorder to look at business records and assets.

A e mentThe time limits by which HM Revenue & Customscan make an assessment of income tax, capitalgains tax or corporation tax have been aligned.The normal time limit is now four years, but thisis increased to six years where tax is lost due tocareless behaviour, and to 20 years where tax is lostdue to deliberate behaviour.

Although the new time limits for makingassessments only apply from 1 April 2010, the oldtime limits are not examinable from the June 2010sitting onwards.

C aimThe general time limit for making claims underincome tax, capital gains tax and corporation taxhas been aligned at four years. An income tax claimfor the tax year 200910 must therefore be made by5 April 2014.

Although the new time limit for making claimsonly applies from 1 April 2010, the old timelimits are not examinable from the June 2010sitting onwards.

Intere t on n erpai an overpai taxThe assumed rates of interest on underpaidand overpaid income tax, Class 4 NIC, capitalgains tax and corporation tax are based on theactual rates in force (for income tax purposes) at6 April 2009.

For the June and December 2010 sittings theassumed rate of interest on underpaid tax willtherefore be 2.5%. There is no longer any interestpaid in respect of overpaid tax.

David Harrowven is examiner for Paper F6 (UK)

TAblE 1: sAMANThAs gROss INCOME (EXAMPlE 9)

200607 200708 200809 200910

Trading profit/(loss) 23,100 31,600 24,200 (84,000)Property businessprofit 3,600 7,100 3,800 5,800

Assuming that the personal allowance for 200910 appliesthroughout, Samanthas taxable income will be as follows:

200607 200708 200809 200910 Trading income 23,100 31,600 24,200 Additional lossrelief (18,400) (31,600) (18,400) (18,400) (18,400) (18,400)

4,700 24,200 Property businessprofit 3,600 7,100 3,800 5,800 (18,400) (18,400) (18,400) (18,400)

8,300 7,100 28,000 5,800Loss relief(s.64 ITA 2007) (28,000) 18,400) (18,400) (18,400) (18,400)

8,300 7,100 5,800Personal allowance (6,475) (6,475) (5,800) 18,400) (18,400) (18,400) (18,400)Taxable income 1,825 625 18,400) (18,400) (18,400) (18,400)

TAblE 1 NOTEs A loss relief claim against total income (under s.64 ITA 2007) for

200910 would waste Samanthas personal allowance for that year. The additional loss relief claims for 200607 and 200708 are

restricted to a total of 50,000 (31,600 + 18,400). The balance of the trading loss of 6,000 (84,000 - 28,000 - 31,600

- 18,400) is carried forward against future trading profits (unders.83 ITA 2007).

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TAblE 2: MINgs CAPITAl AllOwANCE ClAIM FOR yEAR ENdEd 5 APRIl 2010 (EXAMPlE 6)

Pool Motor Motor Special Allowancescar car rate pool

WDV brought forward 16,700 18,800Additions

Motor car (1) 28,300Motor car (2) 11,600Motor car (4) 10,100

Proceeds Motor car (4) 4,198 (8,300)45,000 1,800

WDA 20% (9,000) 9,000WDA restricted (3,000) 3,000WDA 20% (2,320) x 85% 1,972WDA 10% 4,198 (180) 180

36,000Addition qualifying for AIA and FYA

Equipment 61,400AIA 100% (50,000) 50,000

11,400FYA 40% (4,560) 4,560

6,840Addition qualifying for FYA

Motor car (3) 16,800FYA 100% (16,800) 16,800

4,198 4,198 4,198 4,198

WDV carried forward 42,840 15,800 9,280 1,620 85,512 Total allowances 85,512

M O T O R C A R ( 2 ) h A s C O

2 E M I s s I O N s b E T w E E N 1 1 1 A N d 1 6 0 P E R k I l O M E T R E

, A N d

T h E R E F O R E Q u A l I F I E s F O R w R I T I N g - d O w N A l l O w A N C E s A T T h E R A T E O F 2 0 %

.

T h I s M O T O R C A R I s N

O T I N C l u d E d I N T h E g E N E R A l P O O l b E C A u s E T h E R E I s P R I V A T E

u s E b y M I N g

.

TAblE 2 NOTEs Motor car (1) has CO 2 emissions between 111 and 160g per kilometre, and therefore qualifies for

writing-down allowances at the rate of 20%. Motor car (2) has CO 2 emissions between 111 and 160g per kilometre, and therefore qualifies for

writing-down allowances at the rate of 20%. This motor car is not included in the general pool becausethere is private use by Ming.

Motor car (3) has CO 2 emissions up to 110g per kilometre and therefore qualifies for the 100% firstyear allowance.

Motor car (4) has CO 2 emissions over 160g per kilometre and therefore qualifies for writing-downallowances at the rate of 10%. There is no balancing allowance on the disposal of this motor carbecause the expenditure is included in a pool.



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TAblE 3: lOsER lTds REsulTs (EXAMPlE 12)

Year ended Period ended Year ended Year ended Year ended31 December 30 September 30 September 30 September 30 September

2005 2006 2007 2008 2009

Trading profit/(loss) 84,000 13,800 15,200 78,700 (146,800)Property businessprofit 5,000 4,600 4,000

Gift Aid donations (800) (1,000) (1,200)

Assuming that Loser Ltd claims relief for its trading loss as early as possible, its profits chargeable tocorporation tax will be as follows:

Year ended Period ended Year ended Year ended31 December 30 September 30 September 30 September

2005 2006 2007 2008

Trading profit 84,000 13,800 15,200 78,700Property businessprofit 5,000 4,600 4,000 89,000 18,400 19,200 78,700Loss relief (s393A) (12,400) (18,400) (19,200) (78,700)

76,600 Gift Aid donations (800) Profits chargeable tocorporation tax 75,800

E X T E N

d E d l O s s R E l I E F I s C A P P E d A T A

M A X I M u M O F 5 0

, 0 0 0

. F O R l I M I T E d C O M P A N I E s I T

A P P l I E s T O l O s s - M

A k I N g A C C O u N T I N g P E R I O d s E N d I N g b E T w E E N 2 4 N O V E M b E R

2 0 0 8 A N d 2 3 N O V E M b E R 2 0 1 0

.

TAblE 3 NOTEs The amount of unrelieved trading loss for the year ended 30 September 2009 is 18,100 (146,800 -

78,700 - 19,200 - 18,400 - 12,400), and this will be carried forward (under s.393(1) ICTA 1988) againstfuture trading profits.

There is no restriction to the amount of loss relief for the year ended 30 September 2008 as this iswithin the normal 12-month carry back period.

For the year ended 31 December 2005 loss relief is limited to 12,400 (50,000 - 19,200 - 18,400), being thebalance of the 50,000 limit. This is less than the maximum possible relief of 22,250 (89,000 x 3/12).

Without the extended relief it would have only been possible to claim loss relief of 78,700 for the yearended 30 September 2008.

If Loser Ltd had ceased trading on 30 September 2009 then relief for the terminal loss of 146,800would have been given in exactly the same way except that the relief for the year ended 31 December2005 would have been 22,250 instead of 12,400, since the 50,000 limit would not then apply.

15 TEChNICAl


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PaPer P6 (UK)This should be read by those of you who are takingPaper P6 (UK) at either the June or December2010 sittings. All of the changes relating to PaperF6 (UK) set out earlier in this article are relevantto Paper P6 (UK). This article summarises theadditional changes made by the Finance Act 2009that have an effect on the Paper P6 (UK) syllabus.All of the exclusions set out in the Paper F6 (UK)article apply equally to Paper P6 (UK) unless theyare referred to below.

Please note that if you are sitting Paper P6 (UK)in December 2009, you will be examined on theFinance Act 2008, which is the legislation as itrelates to the tax year 200809. Accordingly, thisarticle is not relevant to you, and you should insteadrefer to the Finance Act 2008 article published onthe ACCA website.

INCOME TAXForei n ivi enThe Finance Act 2008 introduced a 10% tax creditfor UK resident individuals holding less than 10%of the shares of non-UK resident companies. Thetax credit operates in the same way as it does inrelation to dividends from UK resident companies;the foreign dividend income is grossed up at100/90, the gross income is taxed at 10%/32.5%and there is a 10% tax credit. The tax credit is notrepayable in cash.

The Finance Act 2009 has extended theavailability of this tax credit to UK residents whoown 10% or more of the shares in non-UK residentcompanies provided the company is resident ina qualifying territory. A qualifying territory is onewhich has a double taxation treaty with the UK thatincludes a non-discrimination clause.

T e remittance a iThe remittance basis is available in respect of: overseas income where the taxpayer is UK

resident and either non-ordinarily resident ornon domiciled

chargeable gains realised on assets situatedoverseas where the taxpayer is UK resident orordinarily resident, but not UK domiciled.

The Finance Act 2008 introduced the requirementto pay 30,000 in certain circumstances in orderto claim the remittance basis subject to it applyingautomatically where an individual has unremittedincome and gains of less than 2,000. Theremittance basis also applies automatically wherethe individual: is resident in the UK for no more than six of the

nine tax years prior to the year in question or isunder the age of 18 throughout the year; and

has no UK income/gains (other than taxedinvestment income of no more than 100) (priorto the Finance Act 2009, there was a requirementfor the individual to have no UK income/gains);and

has not remitted any income or gains during thetax year.

F rni e o i a ettinThe letting of furnished holiday accommodationis treated as if it were a trade. Accordingly, anylosses arising can be relieved as if they are tradinglosses, pension contributions can be made inrespect of the income, and certain capital gainsreliefs are available. This beneficial treatment willno longer be available from 201011. However, forthe tax year 200910, the rules have been extendedto include properties in the European EconomicArea and not just those in the UK.

T h I s s h O u l d b E R E A d

b y T h O s E s T u d E N T s w h O A R E T A k I N g P A P E R P 6 ( u k ) A T E I T h E R

T h E J u N E O R d E C E M b E R 2 0 1 0 s I T T I N g s

. A l l O F T h E C h A N g E s R E l A T I N g T O P A P E R F 6 ( u k )

s E T O

u T A R E R E l E V A N

T T O P A P E R P 6 ( u k ) . T h I s s u M M A

R I s E s T h E A d d I T I O N A l C h A N g E s

M A d E b y T h E F I N A N C E

A C T 2 0 0 9 w h I C h h A V E A N E F F E C T O N T h E P A P E R P 6 ( u k ) s y l l A b u s .



17/21

Enterpri e inve tment c eme (EIs)An individual who has subscribed for EIS sharesis able to claim to have the whole or part of thesubscription treated as if made in the previous taxyear. There is no longer a need for the shares to beacquired in the first six months of the tax year forthis claim to be available. In addition, there is nolonger a limit on the amount subscribed that canbe treated in this way provided the EIS limit for theprevious year is not exceeded.

There has been a simplification of therequirements relating to the EIS companys use ofthe funds acquired. The company must now use thewhole of the funds in its qualifying trade in the twoyears following the share issue.

Vent re capita tr t (VCT)The change to the requirement in respect of the useof invested funds by an EIS company also appliesto companies invested in by a VCT. Accordingly, themoney invested by the VCT must be used by theinvestee company in its qualifying trade within thetwo years following the share issue.

Capita a o anceThe changes made to plant and machinery capitalallowances and industrial buildings allowances setout in the Paper F6 (UK) article above, together withthe related exclusions, also apply to Paper P6 (UK).

de i erate tax e a terThe details of tax defaulters whose deliberateactions result in potential lost revenue to HMRCof more than 25,000 will be made public. Thisapplies to both individuals and companies. Thedetails will not be published if the taxpayer makesa full disclosure (prompted or unprompted) of theactions resulting in the potential lost revenue.

Defaulters who have incurred a penalty forthe deliberate understatement of tax of at least5,000 will be required to submit more detailedinformation of their tax affairs for the followingfive years.

CORPORATION TAXdivi en incomeThe Finance Act 2009 has made changes tothe taxation of dividend income received bycompanies. Under the new rules, most dividendsreceived, from both UK resident and non-residentcompanies are not subject to corporation taxbut are taken into account when calculating frankedinvestment income and the rate of corporation taxpayable. There are exceptions to these rules butthe exceptions are not in the syllabus. It shouldtherefore be assumed in the exam that all dividendsreceived from both UK and non-UK residentcompanies are exempt from corporation tax.

Contro e orei n companie (CFC )A CFC is a non-UK resident company that iscontrolled by UK resident persons and pays lessthan three quarters of the tax that it would have topay if it were UK resident. The profits of a CFC maybe apportioned to a UK company such that they arethen subject to UK corporation tax.

No apportionment is necessary where the CFCsatisfies one of the exceptions, for example, whereits accounting profits do not exceed 50,000. Theexception for companies that exhibit an acceptabledistribution policy has been repealed by the FinanceAct 2009.

Corporate vent rin c eme (CVs)The change to the requirement in respect of the useof invested funds by an EIS company also applies toCVS investments. Accordingly, the money investedmust be used by the CVS company in its qualifyingtrade within the two years following the share issue.

T h E d

E T A I l s O F T A X d E F A u l T E R s w h O s E d E l I b E R A T E A

C T I O N s R E s u l T I N P O T E N T I A l

l O s T R E V E N u E T O h M

R C O F M O R E T h A N 2 5 , 0 0 0 w I l l b E M A d E P u b l I C

. T h I s A P P l I E s T O

b O T h

I N d I V I d u A l s A N

d C O M P A N I E s .

17 TEChNICAl


18/21

d tie o enior acco ntin o cerRules have been introduced that oblige the senioraccounting officer of a large company or group ofcompanies to: ensure that the company establishes and

maintains tax accounting arrangementsthat enable its tax liabilities to becalculated accurately

provide an annual certificate to HMRC to theeffect that appropriate accounting arrangementswere in existence together with an explanation,where necessary, of any inadequacies.

A large company is defined as one with a turnoverof more than 200m or a balance sheet total ofmore than 2bn.

VAluE AddEd TAX (VAT)E ectronic in o VAT ret rnElectronic filing of VAT returns is to be madecompulsory from 1 April 2010 for: all VAT registered businesses with an annual VAT

exclusive turnover of 100,000 or more;and

all newly VAT registered businesses regardless oftheir turnover.

Partia exemptionThe recovery of non-directly attributable input taxby a partially exempt business is by reference tothe vatable proportion of its turnover, subject to thede minimis limits. An annual adjustment is madein order to ensure that the total VAT recovered is inaccordance with the figures for the year as a whole.

You need to be aware of two changes to partialexemption introduced by the Finance Act 2009.

When calculating the amount of recoverable inputtax for a quarter, the trader can now choose to usethe percentage for the previous year rather thanthe partial exemption percentage for that par ticularquarter. The trader must use the same method forthe whole of the year.

The method used will not make any difference tothe total amount of VAT recovered as the annualadjustment will ensure that the final amountrecovered is in accordance with the figures for thewhole year. However, a business may find it easierfrom an administration point of view to use thepartial exemption percentage for the previous yearas opposed to calculating the actual percentage foreach quarter.

The second change is that the trader can nowchoose to enter the annual adjustment on the returnfor the final period of the year rather than the firstperiod following the end of the year.

P ace o pp o ervicePrior to 1 January 2010 the basic rule is that theplace of supply of services is the place where thesupplier has established his business. There arethen various exceptions to this basic rule.

For example, the place of supply of variousprofessional services is the place where the customerbelongs if the customer is outside the EU or is abusiness customer within the EU. Under these rules,a VAT registered customer in the UK was requiredto account for output tax on such services and thenreclaim it as input tax in the normal way; this isknown as the reverse charge procedure.

On or after 1 January 2010 the basic rule is thatthe place of supply of services to a business iswhere the customer has established that business.Accordingly, where a business customer in the UKpurchases services from overseas, it must use thereverse charge procedure just as it would have donefor professional services under the old rules.

The place of supply to non-business customerscontinues to be the place where the supplier hasestablished his business. E

l E C T R O N I C F I l I N g O F V A T R E T u R N s

I s T O b E M A d E C O M P u l s O R y F R O M 1 A P R I l 2 0 1 0

F O R A l l V A T R E g I s T E R E d b u s I N E s s E s w I T h A N A N N u A l V A T E X C l u s I V E T u R N O V E R

O F 1 0 0 , 0 0 0 O R M O R E

A N d A l l N E w l y

V A T R E g I s T E R E d b u s I N E s s E s R E g A R d l E s s O F

T h E I R

T u R N O V E R .



19/21

The rules in force prior to 1 January 2010 will notbe tested from the June 2010 sitting onwards suchthat candidates need only know the new rules.

Time o pp o ervice to ic t e rever ec ar e app ieThe time of supply, or tax point, of a single supplyto which the reverse charge procedure applies is theearlier of the time the service is completed andthe time the service is paid for. Where suppliesare continuous, the time of the supply will be theend of each billing or payment period. Where thereare no billing or payment periods, the time ofsupply will be the earlier of 31 December each yearand the date on which any payment is received.

T e fat rate c emeThe flat rate scheme simplifies administration byenabling a trader to calculate the amount of VATdue to HMRC by reference to a percentage ofVAT inclusive turnover rather than by calculatingoutput tax less input tax.

In order to join the scheme, the annual vatableturnover of the business (exclusive of VAT) mustnot exceed 150,000. The requirement for the totalannual turnover of the business (exclusive of VAT)including exempt supplies to not exceed 187,500has been removed by the Finance Act 2009.

CAPITAl gAINs TAXgi t re ie Gift relief is available on the gift or sale for lessthan market value of cer tain categories of assetsincluding agricultural property that would qualifyfor inheritance tax agricultural property relief.

The definition of agricultural property for thepurposes of inheritance tax has been extended toinclude property in the European Economic Areaand not just property in the UK, Channel Islandsand the Isle of Man. Accordingly, agriculturalproperty situated in the European Economic Areanow qualifies for gift relief.

INhERITANCE TAXT e ni rate anThe nil rate band for 200910 is 325,000(200809 312,000).

A ric t ra propert re ie Agricultural property relief is available in respectof the agricultural value of agricultural propertyand reduces the value transferred by either 50% or100%. The definition of agricultural property hasbeen extended to include property in the EuropeanEconomic Area and not just property in the UK,Channel Islands and the Isle of Man.

sTAMP duTy ANd sTAMP duTy lANd TAXThe rates and limits for 200910 are the same asthose in 200809.

There are no examinable changes to these taxesin respect of the exams in 2010.

FuRThER REAdINgThe changes introduced by the Finance Act 2009will be incorporated into the following articlespublished on the ACCA website: Corporation tax Corporation tax and groups parts 1 and 2 Capital taxes International aspects Trusts and tax

Rory Fish is examiner for Paper P6 (UK)

T h E R

A T E s A N d l I M I T s O F s T A M P d u T y A N d s T A M P d u T y l A N d T A X F O R 2 0 0 9 1

0 A R E T h E

s A M E

A s T h O s E I N 2 0 0 8 0

9 . T h E R E A R E

N O E X A M I N A b l E C h A N g E s T O T h E s E T A X E s I N

R E s P E C T O F T h E E X A M s I N 2 0 1 0

.

19 TEChNICAl


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cat PaPer 9This appendix outlines the effects of the changesmade in the Finance Act 2009 on Paper 9 (UK).The sub headings refer to the headings inthe main article on Paper F6 (UK), written byDavid Harrowven.

INCOME TAXRate o income taxThe revised thresholds and the rates of tax shownwill also be used in CAT Paper 9 (UK). The use ofthe 10% rate for savings income is examinable.

Per ona a o anceOnly the personal allowance for taxpayers under 65is examinable in CAT paper 9 (UK) informationon the higher allowances and the restriction limitwill not be given in the CAT Paper 9 rates andallowances sheet.

In ivi a savin Acco nt (IsA )Detailed knowledge of these remain outside thesyllabus but knowledge of income from ISAs beingnon-taxable is examinable.

Compan car an e ene tCalculation of the appropriate percentage for carbenefits (including low emission and diesel cars)and its use in the final car benefit calculation isexaminable as is the car fuel benefit.

O cia rate o intere tThe revised rate of 4.75% will also be used in CATPaper 9 (UK).

Capita a o anceThe new rules for capital allowances for cars willbe examinable with rates being given in the ratesand allowances sheet. A cars CO 2 emission rate willalways be given in the exam.

Both the temporary re-introduction of FYA andthe transitional rules for expensive cars will berequired knowledge in CAT Paper 9 (UK).

In tria i in a o ance (IbA)CAT Paper 9 (UK) will follow the same treatmentfor IBA as Paper F6 and therefore the writing-downallowance for both exams in 2010 will be 2%.

lea e motor carThese will be treated in the same way as PaperF6 with 15% of leasing costs being disallowed forcars with a CO 2 emission rate in excess of 160gper kilometre.

T h I s A P P E N d I X O u T l I N E s T h E E F F E C T s O F T h E C h A N g E s M A d E I N T h E F I N A N C E A C T

2 0 0 9 O N C A T P A P E R 9 ( u k ) . T h E s u b h

E A d I N g s R E F E R T O T h E h E A d I N g s I N T h E M A I N

A R T I C

l E O N P A P E R F 6 ( u k ) , w R I T T E N b y d A V I d h A R R O w V E N

.

ThE CONTENT OF TAX

ARTIClEs dOEs NOT AMOuNT TOAdVICE ON A PARTICulARMATTER ANd shOuld NOT bETAkEN As suCh. NO RElIANCEshOuld bE PlACEd ON ThECONTENT OF AN ARTIClE As ThEbAsIs OF ANy dECIsION.ThE AuThORs ANd ACCAEXPREssly dIsClAIM All lIAbIlITyTO ANy PERsON IN REsPECT OFANy INdIRECT, INCIdENTAl,CONsEQuENTIAl OR OThERdAMAgEs RElATINg TO ThE usEOF TAX ARTIClEs PublIshEd INsTudENT ACCOuNTANT MAgAzINE.


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lo re ie The transitional rules of loss relief will not beexamined the examiner will not set any questionsinvolving loss relief in either of the two examsin 2010.

Pen ion c emeThe new annual allowance and lifetime allowanceswill be given in the exam and knowledge of boththe excess charge and the additional charge whenpensions are taken is expected.

CORPORATION TAXRate o Corporation TaxThe rates of tax and the upper and lower limits willbe given in the rates and allowances sheet in thesame way as Paper F6 and will remain examinable.

lo re ie The transitional rule for losses occurring inperiods ending between 24 November 2008 and23 November 2010 will not be examinable. Theexaminer will not set questions involving this rule questions involving carry forward losses and normalterminal loss rules may be set.

Over ea ivi en .These remain outside of the CAT Paper 9(UK) syllabus.

CAPITAl gAINs TAXIn ivi a exemption imitThe new limit of 10,100 for 200910 will also beused in CAT Paper 9 (UK).

RATE OF CAPITAl gAINs TAXBoth the 18% rate and the effective rate of 10% forassets qualifying for Entrepreneurs relief will applyto CAT Paper 9 (UK).

NATIONAl INsuRANCE CONTRIbuTIONs (NIC)C a 1 an C a 1A NICThe new rates and thresholds will also be used inboth 2010 exams for CAT Paper 9 (UK). Where NICis required to be calculated on a weekly or monthlybasis the new thresholds should be divided by 52or 12 respectively.

C a 2 an C a 4 NICThe same detail will be used in both exam sessionsin 2010 in CAT Paper 9 (UK).

VAluE AddEd TAXRe i tration an dere i tration limitThe new registration and deregistration limits willalso be used in the CAT Paper 9 (UK) June andDecember 2010 exams.

stan ar rate o VATThe same detail will be used in CAT Paper 9 (UK) asis illustrated for Paper F6.

TAX MANAgEMENTAll the detail included under this heading in thePaper F6 article is also examinable in the CAT Paper9 (UK) exam. The calculation of interest howeverremains outside the syllabus.

Keith Molson is examiner for CAT Paper 9 (UK)

TAX ARTIClEsThe content of tax articles does not amount toadvice on a particular matter and should not betaken as such.

No reliance should be placed on the contentof an article as the basis of any decision. Theauthors and ACCA expressly disclaim all liabilityto any person in respect of any indirect, incidental,consequential or other damages relating tothe use of tax articles published in Student Accountant magazine.

T h E l O s s R E l I E F T R A N

s I T I O N A l R u l E F O R l O s s E s O C C u R R I N g I N P E R I O

d s E N d I N g

b E T w

E E N 2 4 N O V E M b E R 2 0 0 8 A N d 2 3 N O V E M b E R 2 0 1 0 w I l l N O T b E E X A M I N A b l E

. T h E

E X A M

I N E R w I l l N O T s E T Q u E s T I O N s I N V O l V I N g T h I s R u l E

Q u E s T I O N s I N V O l V I N g

C A R R y F O R w A R d l O s s E s A N d N O R M A

l T E R M I N A l l O s s R u l E s M A y b E s E T .

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Financial Act 2009

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Transcript of Financial Act 2009