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Wasted entire reading time on Q1 – looked up and was 13 mins in.
But managed to have a good go at everything else. I had to keep a close eye on my watch though.
The only bit of the paper I didn’t answer was the question about leaving estate to grandchildren as well as children? Totally stumped. Am sure it was an easy 2 marks but blanked.
Hopefully there are a lot of marks for workings because I think I had some strange answers but no time to check as was scribbling away until pens down.
For Q5 I figured the transfer was £146,000 less two years of annual allowance gives £140,000. This is deducted from Nil band to get £325,000 – £140,000 = £185,000.
I deducted the remaining Nil band of £185,000 from the chargeable PET of £253,000, I then also deducted two years annual allowance (as it is more than 2 years from the initial CLT) from this to get £253,000 – £6,000 – £185,000 = £62,000. I taxed this at 0% with no taper relief to get £24,800
Does anyone agree/disagree?????
I think the error in Question 1 is the treatment of capital expenditure on house he rented. The question stated 8400 was paid to repair the roof before it was rented, i.e. it wasn’t inhabitable. Kaplan book has a section on the different interpretations.
So did people include or exclude this? How did they treat the insurance claim and 2nd cost to repair the roof? I pretty certain these should be excluded
Did the property income also include a figures for grant of a lease and amortization or is that another question?
3 Doubts i want to clear
Q1 :-
for trading income we had to make basis period… the periods give in exam were 1Jan2013 – 30 April2013 and second period ending 30 April 2014. We had to calculate the tax for 13/14 period so the basis i calculated was :-
1 Jan 2013 – 5 April 2013
1 Jan 2013 – 31 December 2013 <-= taken for 2013/14 computation because the period ending in 13/14 … 30April was less than 12months so took first 12 months of trading.For the fuel charge did we have to do it on 21100 x Co2 or just take it out of the figure that was given in question.
For Question 2 Vat
We weren’t suppose to deduct the purchases and sales made to group companies to calculate VAT right ? because the group didn’t go for VAT group so the sales to subsidiary etc would be charged with vat ?- Topics: 0
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It was a very Lengthy paper but the questions where not so bad just that they were too complexed for the time given.
For me Q4 was the best question and it was a sweet 15 marks.
did any body had a loss for one of the company’s in Q2Not sure if these are right but…….
Q1 – I had tax liability in around £68k and as the amount was over £60k the full £1.7k of child benefit would be reclaimed by HMRC. Fuel benefit is £21,100 x % x no. of mths/12.
Q2 – Difficult one with the loss in Road Ltd and thought the VAT was tricky enough.
Q3 – I had no issue with any of the calcs they were straight forward, but i thought the wording of the question was a bit vague, I didnt know if I had to take the ann allowance (£10,900) off each individual item, off at the end, not sure on that????
Q4 – Seemed too easy to be true so probably messed it up but for my inital calcs I used the £52k less pa for my tax and then made adjustments only when working out the cash basis.
Q5 – Again was not a strightforward IHT calc, I thought the question wording was misleading. ended up with £600k+ IHT payable.
Any thoughts anyone, I know we shouldn’t dissect papers after but it helps sometimes.
Skip a generation
When making gifts either during lifetime or on death, it can be beneficial to skip a generation so that gifts are made to grandchildren rather than children. This avoids a further charge to IHT when the children die. Gifts will then only be taxed once before being inherited by the grandchildren, rather than twice.Of course such planning depends on the children already having sufficient assets for their financial needs.
Child benefit income tax charge
Where income is between £50,000 and £60,000, the charge is 1% of the amount of child benefit received for every £100 of income over £50,000.
For the tax year 2013–14 Cecil has a salary of £64,000. He received child benefit of £1,056 during the year.
Cecil’s adjusted net income of £64,000 exceeds £60,000, so the child benefit income tax charge is £1,056, being the amount of child benefit received.
There is a lecture on CLT being 7 years on 7 years. The 7 year rule!
It also covered why you would leave estate to grandchildren instead of children. (It wouldn’t be double taxed)
Thanks OT, although paper was a sure fail. Ha.
The PAYE system has been modernised by the introduction of real time reporting. The fundamentals of PAYE itself are unchanged, so employees are still issued with tax codes, and the employer is still responsible for deducting tax and national insurance contributions (NIC). The due dates for paying income tax and NIC to HM Revenue and Customs remain unchanged. However, with real time reporting, employers send income tax and NIC information to HM Revenue and Customs electronically every time employees are paid (either weekly or monthly) rather than waiting until after the end of the tax year as was previously the case.
Forms P35 and P14 are no longer required, since end of year information is included with the final real time submission for the tax year. However, form P60 must still be provided to employees following the end of the tax year. Form P45 has also been retained, and this is provided to a leaving employee.
Employers are charged a penalty if their final real time submission for a tax year is made late. The deadline is 19 May following the end of the tax year, and the penalty that can be imposed is £100 per month per 50 employees. For the tax year 2013–14 there are no penalties if submissions made during the tax year are late.
Since information must be filed electronically, it is no longer possible to produce a payroll manually. Employers must either run payroll software or use the services of a payroll provider.
Q5 leaving estate to the kids, did the question imply distribution of estate after death or was it before?
I wrote a lot of crap about small gifts allowance , gifts made as part of income as these are all exempt from IHT. Also rewriting will with conditional offering of £2,500 upon her grandchildren getting married, although don’t know if that’s possible?
Divyx Q3 the first part you just had to computer the gain, literally selling price less costs
Q5 what did you value the property at?
Well it was totally to opposite to exam tips published. a very tricky paper which required luck more than brain. i practiced alot but still think can manage to pass this one
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The exam was quite OK compared to last December exams ….
But my lack of Knowledge cause the paper to be difficult for me…- Topics: 0
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The exam was lenghty but nevertheless manageable. Time management poses a little problem. Started with Q1, followed by Q2 VAT part then went to Q3 Q4 Q5 and returned to Q2 in the last 15 mins. Pens down on heading up Road Ltd computation.
Q4 was the easiest followed by Q5. The CLT would not suffer IHT as it was covered by the NRB after the 6000 annual exemptions applied. I am not sure if I am correct here. Plz comment if this is not so.
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Sincerely the paper was ok, it covered mst of the easiest chapters of the syllabus but cudnt make it 🙁 too lengthy..the theory part disaster! am a bit cnfused of whether the VAT question, we shud add the 20% or not ?? i ddnt! i guess it was too easy to just deduct input from output :/
thought the paper was ok.
can i check something with Q1? The trading profit he had was for period 01/01/13-31/04/13 and then 01/05/14-31/04/14
therefore, i just worked out 1 months profit for the first period (that of April) and then May-March for second period? surely Jan/Feb/March in the first period don’t fall into the 13/14 tax year, nor does the April 2014 profit of the second period?
If that is wrong then i have completely ballsed it up.
Q5 – the CLT – i set it off against the NIL rate band for that year, but there was no death tax as it was made 7 years prior to death.
the PET followed, which was then taxed upon death – but only a portion of it was able to be set off against the NIL rate band due to the CLT using it before.
upon death though, i added the CLT NIL rate band back in, because death fell more than 7 years after her CLT.
My understanding of trade profit is that the first year is to the end of the first tax year.
The second tax year has only one month in it before end of first period. So instead for the second tax year you tax the first twelve months of trading. This will be the full four months of trading for the first period 01/01/13 plus the first 8 months of the second period.
The second year (and therefore the year to be taxed for 2013/14 is from 01/01/13-31/12/13 (12 months)
For Q5 I thought the Nil band is used up by the CLT then the PET. Basically to tax PET you look back 7 years and find that some of the Nil band was used by the CLT (though the CLT is not death tax chargeable it does use up The nil band). Anyway I take the CLT of the Nil band then apply the remaining Nil band to the PET. I got death tax on PET of £24,800. After that as far as I see there is no Nil band left to reduce the death estate. So it is just a matter of adding up all the estate value, deducting funeral expenses and multiplying the lot by 40%.
What do other people think?
Agree with your thoughts on the first question. Think i got trading profit of like £8040 or something like that but i used your method of using the first four months and then the remaining eight months of the full next year.
Q5… The CLT was exempt from using the £325K exemption as it was before 7 years so irrelevant. The cash gift however reduced the band to about £125K (rough figure) the remainder of the estate was taxed at 40%.
Felt it was an ok paper. A bit better than Performance management but you never really know!
Hello guys,
the second period of account ending in tax year 2 was exaclty 12 months so the basis is the 12 months to the end of that period of account
something like this:
Example 2 – where accounting date in Year 2 is 12 months or more after commencement
A new trade commences on 6 July 2007. Accounts are prepared for a 15 month period to 5 September 2008, and to 5 September in each year after that.The basis periods are:
2007-2008 Year 1 6 July 2007 to 5 April 2008
2008-2009 Year 2 6 September 2007 to 5 September 2008
2009-2010 Year 3 6 September 2008 to 5 September 2009hi all, for those that sat this paper, am interested in knowing how accurate the tips were, please comment
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Q1.Basis period
Trading profits given:
1Jan13 – 31Apr13
1May13 – 31Apr14For 2013/14 I used:
1 month from the first period of profit
11 months from the second period (as there isn’t a period of account ending in the 2013/2014 tax year shouldn’t you assess the actual tax year? )
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