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89% on my 1st attempt – incredibly grateful as I was expecting a fail. I was suffering from a migraine during the exam, I could hardly read the paper, so I am stunned but very, very happy 🙂
<cite>@joskof01 said:</cite>
That is true. Hence the maximum contribution to the personal pension scheme is 40K so as to avoid any annual charge.
Workings:
Max contribution for 2012/13 50K
Utilised in 2012/13 (28K+12K) 40K
Untilised in 2012/13 50K-40K= 10KThis same contribution has been done for the past 5 years. Any untilised contribution from the previous 3 years can be brought forward to 2012/13.
Hence,
Utilised in 2009/10 10K
Utilised in 2010/11 10K
Utilised in 2011/12 10KPlus the utilised for 2012/13 10K
This sum up to 40K (being the maximum contribution to the personal contribution.
NB. You’ll only extend the tax band rate by this 40K.“NB. You’ll only extend the tax band rate by this 40K”
….By this £40k grossed up, ie £40k x 100/80 = £50k.
<cite> @duffielda52 said:</cite>
But I thought if the market value was higher than the sale we took the market value & not the actual sales proceeds?The market value was £6.40
She sold to daughter 4.00 -irrelevant
Cost 2.4
Actual gain £4
Annual exemption £10600/ £4 gain = 2650Yes, but you’re missing the part of the question where it specifically said that parent and child both elected to defer rollover gain as much as possible. So you do take the market value as deemed proceeds, but the chargable gain is worked out by deducting actual original cost from actual sales price. The rollover amount is then the balancing figure. So, as I and several other people have already said, the calculation would be:
Market Value…………… £6.40
Cost………………………..(£2.40) (the amount it cost the parent originally)
Rollover relief…………..(£2.40) (this is the last figure that is calculated, after working out the amount chargable now, below)
Gain………………………..£1.60 (this is worked out before the relief above, and is actual proceeds (£4) less actual cost (£2.40)Now that you know the gain per share is £1.60, it’s a simple calculation of the annual exemption divided by the fain: £10,600 / £1.60 = 6625
<cite> @oldc02 said:</cite>
Yes this is exactly what I didI thought that only 2 companies were associates: I think they were Are and Can (Greenzone owned 60% and 90% I think?)
The other UK co was only 40% owned.
The other co was not a UK company – I was not sure on this though. I thought overseas branches were fine, but overseas entities were not.<cite> @oldc02 said:</cite>
I wasn’t sure as I wasn’t sure if it was from the date of the invoice Sep or the date the payment was due Oct. Knew I’d get it the wrong way around. ThanksI got that the impairment was disallowable: in order for bad debt relief to be claimed, 6 months atfer the DUE date must have passed. It was due in October I think and so April would have been the earliest that bad debt relief could be claimed. This was the VAT return for the ¼ ended March so bad debt relief could not yet be claimed.
<cite> @faranjamal said:</cite>
The nil rate band given in the question was irrelevant as it was a PET (Potentially EXEMPT Transfer)
It is only relevanf for CLTs because they are chargeable when gifted.In the VAT Private Fuel, the full 300 was deductible, right? (as it was already scaled for the quarter)
No, the scale charge for the ¼ was inclusive of VAT. Therefore the £50 VAT element was to be added to the output VAT only, I thought?
<cite> @duffielda52 said:</cite>
I agree with your workings but wasn’t the market value £6.40 the cost £2.40 (she sold to her daughter for £4 which is irrelevant. ) Leaving a gain of £4 per share. 10600/4 = 2560??That makes sense – I thought there was gift relief but didn’t remember that the market value was £6.40.
Therefore:
Deemed Proceeds £6.40 (market value)
Cost (£2.40)
Gift Relief (£2.40)
Gain to tax now £1.60 (£4 actual proceeds less £2.40 cost)<cite> @atab said:</cite>
I calculated it as 10000 x 2.4 = 24,000 cost
annual exemption = 10,600
24,000 + 10,600 = 34,600
34,600 / 4 = 8,650 shares (in order to avoid incurring a gain)I think: when you calculate a gain involving subject matter that was sold at a below market value – as was the case here – you take market value as the deemed proceeds. So for 1 share:
Deemed proceeds £4
Cost <u>(£2.40)</u>
<b>Gain to tax now £1.60</B>£10,600 / £1.60 = 6625 shares
<cite>@dozen909 said:</cite>
Charlotte he was told the property under letting furnishedso in this case no property profit as utilized against the capital allowance
please help me for this
and also let me know how much to extend the banding 50,000 or not ?Yes, if you extended John’s tax bands by £50k (£40k personal pension contributions only x 100/80) I think this is correct.
And we were told that John’s property did not qualify as a business under the furnished holiday lettings rules. Thus, the income became property income, or so I thought.
Unless you’re referring to the last question, where Phil received the house and let it out…?
<cite> @oldc02 said:</cite>
Charlotte – I had the same workings for you £10,000 unused annual allowance and brought these forward plus the £10,000 for 2012/13. Therefore, additional pension contribution of £40k added to the pension paid in year of £40k so I extended the basic rate band by £80k, not sure if that was right?Mort112 – I added on £717 to her employment as a benefit of the extra mileage and yes excluded the charity donation as this included advertising.
I didn’t have a clue how to calculate the shares bit. I didn’t know whether to deduct the pension from the employment income either so I just left it.
I am pretty sure you’d just extend the tax bands by a grossed up £40k and not £80k. This is because you only extend tax bands by personal pension contributions and we already worked out that this was £40k. The current year £40k you mention is made up on the employee and employer contributions into an occupational scheme, rather than a personal one.
I can’t remember how much my mileage variance was, but I think it was higher than £717. The 60p that was paid per mile for the ordinary commute was entirely taxable because the ordinary daily commute is not business mileage and so does not qualify for the 45p tax free relief per mile. So it was a case of the travel between Surf and clients, and the travel between home and the clients, being the only 2 lots of the 3 lots of mileage that could have any element of tax free allowance.
I would say yes, deduct the occupational pension contribution from his salary in the employment income working (only his contribution, not his employer’s) as this is a tax free benefit.
And because his personal pension contribution was £40k, yes, you’d add a grossed up amount of £50k when extending the tax bands.
in Q1, there was a married couple (John and Rhonda).
Did anyone split the property income 50/50 between them? I decided not to as the questions said the property was owned by John, but I was not sure as why else were we told that they were married? It didn’t seem to have any impact on anything, if not the property income?
I had thought that the question specifically said that he had NOT used his annual allowance, (which is £50k per year for both personal and occupational contributions), because he had not made any personal contributions previously, and had only contributed £28k himself + the £12k employer contribution per year?
You can carry forward unused pension allowances for 3 years, provided you are a member of an occupational pension scheme – which he was as we were told he had made this same £28k contribution for the past 5 years.Thus, he would have made a personal contribution of £40k during tax year 12/13, no?
Tax year 09/10’s unused allowance (£10k)
Tax year 10/11 ‘s unusued allowance (£10k)
Tax year 11/12’s unusued allowance (£10k)
Plus current FY 12/13’s unused allowance of £10keditted: atab correctly pointed out that employer contributions also use up the £50k allowance, which I had unfortunately excluded during the exam.