IMPORTANT RULES TO REMEMBER :

ALLOWABLE:
Deduct pre trading REVENUE EXPENDITURE from taxable trading profit if it incurred 7 years before, not more
Deduct gift amounts spent on your employers ,unless it becomes a taxable benefit for them.
Deduction can be made on premium for lease. (P-(P*2%*(N-1)) if its less than 50 years only.
Deduct legal expenditure made for the purpose of trade. (not any special legal charges)
Deduct short lease (less than 50 years) renewal charges only. (not the initial amount)
Deduct capital allowance always
Deduct donation to local charity
Deduction on leasing motor cars can be made if the co2 emissions are 110 or less. (see below )
Deduct parking fine incurred by YOUR EMPLOYEES .(see below)
Deduct legal fee for getting loans for your businss, registering patents, defending titles, chasing trade debts.
Deduct salesman/employEE's motor expenses, how much ever it is.
Deduct legal fee for debt collection
Interest on LOAN NOTES for TRADING purposes is allowable expense.

NOT ALLOWABLE:
Add back gifts to customers if they don’t exceed 50 pounds except if they're food, drinks or vouchers and don
Any amount that is crosses these rules, the full amount is taxable, not just the excess.
Add back legal fees if it relates to capital nature.(eg for aquiring a non current asset)
Add back donation to national charity
If the lease on motor car has emissions above 110 gms, 15% of the rental charges should be ADD BACK. This
Add back parking fines incurred by you.
Add back legal fees for acquiring a property
Add back depreciation.
7 years before, not more.

(see below)

es, chasing trade debts.

nks or vouchers and don’t have business promotion logos on them.

ould be ADD BACK. This means 15% of the lease charges are DISALLOWED.
IMPORTANT RULES TO REMEMBER :
NOTE: the maximum capital contribution that can be deducted from the list price of a car is 5000, NOT MO
Provision of one mobile telephone doesn’t give rise to taxable benefit, even if it is a smartphone.
Relocation expenses for upto 8000 is exempted, anything extra must be taxed for.

P11D submission deadline is 6 july 2021.

SPECIAL exemption for renting out furnished rooms in main residence (RENT A ROOM RELIEF). If you expens
If your expenses are <7500, then you only need to reduce it by the expenses and need not opt for the specia
Mileage allowance can be received only for business purposes
Don’t use market value to rented out place by employer for employee, unless it is owned by the employer. (

benefit of living accommodation is higher of annual value and rend paid, provided its not owned by the com
e of a car is 5000, NOT MORE
a smartphone.

OM RELIEF). If you expenses are >7500 , u can deduct only 7500 from rent received.
eed not opt for the special relief.

owned by the employer. (use the higher of annual value/rent paid by employer)

its not owned by the company.

IMPORTANT RULES TO REMEMBER:
AIA : Annual Investment allowance (1,000,000) , only on Plant and Machinery.
FYA : First Year Allowance, only on New low emission cars. No allowance for second hand low emission cars
WDA : Writing Down Allowances, on the balance of main pool can be claimed, IF FYA is not claimed, you can
Long life assets have working life of 25 years or more.
For private use car, the main pool balance is reduced by WDA 18% of the full cost of car, BUT the allowance
NOTE: if the balance on your special and/or main pool is 1000 or less , the full amount can be claimed at WD
For the short life assets ,if the disposal is in the last year, the balancing charge full amount is givent as balan

Special pool consists:

long life assets (25 years or more )
integral features of a building or structure
thermal insulation of building
high emission cars
ALL OF THESE ENTITLED TO 6% WDA ONLY .

DISPOSAL VALUE TO BE DEDUCTED IS THE LOWER OF SALES PROCEEDS AND ORIGINAL COST.

NO AIA, WDA or FYA for final year.

SBA don’t include land , legal fees, repairs and maintenance.

d hand low emission cars.
YA is not claimed, you cannot claim BOTH FYA and WDA(18%).

of car, BUT the allowance claimed is only the business use % of the WDA of 18%.
unt can be claimed at WDA.(ONLY IF IT’S A 12 MONTH ACCOUNTING PERIOD, if its not , then adjust it proportionately)
amount is givent as balancing allowance. (also for the previous years, short life asset is entitled to WDA of 18%)
adjust it proportionately)
d to WDA of 18%)
IMPORTANT POINTS TO REMEMBER:
For the first period accounting period:
If its 12 months. Then copy paste in the second tax year.
If its more than 12 months.Then count back 12 months to the ending date in the second tax year.
If its less than 12 months.Then count forward 12 months from the start date in the second tax year.

when calculating tax periods for terminal loss, when u net profit and loss and get profit , write it as 0
Terminal loss relief must be claimed within 4 years from the final trading tax year.EG: For the ty 2020/21
For relief against total income, you cant go back three years, its either the current year or the previous ye

for loss relief against chargeable gains:

chargeable gains xxxx
less: chargeable loss xxxx
xxxx
less: loss relief xxxx
less: AEA -12300
xxxx

NOTE: BROUGHT FORWARD CAPITAL LOSSES CAN BE RESTRICTED TO PRESERVE 12300 AEA.
ate in the second tax year.
date in the second tax year.

ss and get profit , write it as 0

g tax year.EG: For the ty 2020/21 , claim should be made by 5 April 2025.
he current year or the previous year.

RESERVE 12300 AEA.

IMPORTANT POINTS TO REMEMBER :
The maximum amount of loss relief deductible from the total income is the higher of:
1) 50,000
2) 25% of adjusted net income.

There is no restriction for deducting against trading profit.

Like overlap profit, if overlap loss if there, it should be converted to profit, cannot take it twice
IF your adjusting against capital gain, you should first adjust against the total income of the Tax year of yo
opening year loss relief should be adjust by jumping back 3 years from the starting trade year.
take it twice
me of the Tax year of you capital gain , and then minus from the capital gain.
trade year.
IMPORTANT POINTS TO REMEMBER:
Earnings for the purpose of NIC class 1 contributions, should be made without deducting the pension sche
not be made.
What not to be included is:
The flat rate mileage allowance given my the HMRC , which is 45p per mile, except this time , it stays 45p w
this will be included in the class 1 employers NIC.
DIVIDENDS are not NOT subject to NICs.
But it includes vouchers to be exchangeable for cash or NON cash items.

Payment of the CLASS 1 EMPLOYEES AND EMPLOYERS NIC should be made to the HRMC by the employer b
If electronically , then due date is on 22nd of every month (EXTRA 3 DAYS)

Payment of the CLASS 1A NIC (for benefits) must be made to the HRMC By 22 (electronic date )July followi

Total class 2 contributions a person can make in a year is (3.05*52 weeks) = 159.

Payment of Class 2, Class 4 ,capital gains tax and the income tax are to be paid to the HRMC by the 31 Jan f

Note that class 2 and class 4 NIC are calculated BEFORE deducting the PERSONAL ALLOWANCES.
cting the pension scheme or subscription to professional bodies, meaning what is normally an allowable deduction should

his time , it stays 45p with all the miles ( no reducing to 25p after 10000 miles) (excess money - 45p) *miles and add to income

RMC by the employer by the 19th of each month under the PAYE.

onic date )July following the end of the tax year.

e HRMC by the 31 Jan following the tax year end.

LOWANCES. 4080
n allowable deduction should

- 45p) *miles and add to income

IMPORTANT POINTS TO REMEMBER:
TAX RETURN filing date is the 31 Jan following the end of the tax year. FOR EG. For the tax year 2020/21, ja
Determination of tax due can be made at any time within THREE YEARS of the filing date , that is 31 JAN 20

There are two dates for paying ur POAs (payment of account)

For the current tax year 2020/21 , the relevant amount is based on the previous tax year which is 2019/20
The total income tax for the previous year minus the PAYE , gives u the assessable amount
this amount should split in half
first half to be paid on : 31 JAN 2021
second half to be paid on : 31 July 2021
balance on 31 JAN 2022

If your POA is less than 1000 or if atleast 80% of the income tax liabilty is not covered by the PAYE , the
There is NO escaping the POAs.

Balancing payment Calculation:

Income tax liability for the year XXX
(income tax, class 2, class 4, capital gains tax)
less: PAYE XXX
Less: POA XXX
(XXX)
XXX

Paper tax return must be filed by 31 October following the tax year end. Or 3 months after the HMRC gave

If online then it is 31 Jan following the tax year end.

If you want HRMC to calculate your tax, then file in on 31 Oct following the year end OR 2 months after the

From the date your filed ur return , it ll take HRMC 9 months to check for errors and rectify. But as a taxpa

You have to keep all the reciepts and documents of ur business until five year after 31 Jan following the tax
 the tax year 2020/21, jan 31 2022 is the filing date,
g date , that is 31 JAN 2025.

x year which is 2019/20.

vered by the PAYE , then you have to pay in 3 installments.

ths after the HMRC gave the notice , which ever is later.

nd OR 2 months after the notice date , whichever is later

nd rectify. But as a taxpayer , you get 12 months to amend it

r 31 Jan following the tax year end.

IMPORTANT POINTS TO REMEMBER:

PERIOD OF ACCOUNT:
It’s the period for which the company prepares accounts, it can be longer or shorter than 12 months.
ACCOUNTING PERIOD:
The period of 12 months for which a charge to corporation tax is made.

A company incorporated in the UK is a UK resident , regardless of whether it is controlled overseas or no

DIVIDENDS are exempt from Corporation tax. Hence, there is no need to include them in the TTP compu

Financial year , which is just like tax year , starts form 1 APRIL to 31 MARCH.

CORPORATE TAXES SHOULD NOT BE ADJUSTED PER ANNUM , HOWMUCH EVER MONTH IT IS , IT REMAIN
er than 12 months.

trolled overseas or not.

hem in the TTP computation.

ONTH IT IS , IT REMAINS 19% , NOT CHANGING PROPORTIONS.

IMPORTANT POINTS TO REMEMBER:
IN A COMPANY LOSS:
IF YOU CARRY FORWARD, YOU CAN PARTIALLY ADJUST YOUR LOSS TO AVOID WASTING QCD.
IF YOU CLAIM AGAINST CURRENT YEAR, YOU HAVE TO CLAIM MAXIMUM POSSIBLE AMOUNT.
IF CARRYING BACK, THEN YOU HAVE TO FIRST CLAIM CURRENT YEAR, THEN PREVIOUS YEAR TO FULL EXTE

YOUR PROPERTY LOSS CANNOT BE CARRIED BACK, ONLY CURRENT YEAR AND FORWARD.
CLAIM PROPERTY INCOME RELIEF FIRST, THEN TRADING LOSS, IF POSSIBLE.
PARTIAL CLAIM ALLLOWED ONLY FOR FUTURE YEAR.
 WASTING QCD.
SSIBLE AMOUNT.
REVIOUS YEAR TO FULL EXTEND. IN LIFO BASIS

D FORWARD.
IMPORTANT POINTS TO REMEMBER:
MAXIMUM LOSS THAT CAN BE CLAIMED IS THE LOWER OF:
1) Loss of the surrendering company .
2) Maximum that can be claimed by the claimant company. (ingore capital losses)

Non-UK resident companies are included as members of a capital gains group.

Provided the assets transferred do not result in a potential leakage of UK corporation
tax, no gain/no loss transfers are possible within a worldwide group of companies.
It means that it may be possible to make no gain/no loss transfers to non-UK
resident companies with a branch or agency in the UK.
That means, only companies that are resident in the UK or non-resident
companies trading through a UK branch or agency can take advantage of the
provisions concerning the capital gain relief.

For capital gains/loss transfer:

Brought forward loss cannot be transferred , but can be netted against the current chargeable gains if its

when adjusting the other losses such as brought forward trading loss, Property
business loss, QCD is to be adjusted against its own total profit first and any unrelieved
amount can only be adjusted under group relief. (first adjust against the available
profit and then the balance transfer to group)

Current year trading loss can be surrendered fully to the group company without
adjusting against its own profit.
chargeable gains if its there.
 IMPORTANT POINTS TO REMEMBER:

Should submit self assessment corporation tax return within 12 months following the end of the period of a
Any corporation tax due should be paid within 9 months and 1 day after the end of the accounting period.

Self assessment must be submitted by the later of:

1) 3 months after the issue of notice.
2) 12 months following the end of the period of accounts.
SHOULD BE SUBMITTED ONLINE.
ALSO SUBMIT YOUR FINANCIAL ACCOUNTS WITH IT.

Notify the HRMC if you are within the scope of corporation tax within 3 months after the start of your perio
All your bsns records should be kept till the later of:
1) 6 years after the end of the accounting period.
2) the date on which compliance check is completed.
3) the date on which compliance check is no longer possible.

Amendments:
The HRMC can correct any mistakes within NINE MONTHS OF THE FILING DATE.
The company can correct within 12 MONTHS OF THE FILING DATE.

CLAIM FOR OVERPAYMENT RELIEF must be made within 4 YEARS of the end of the accounting pe

TTP + dividend from non group companies = AUGMENTED PROFIT

To become large company , your augmented profit should be > 1,500,000

REMEMEBER: COMPANIES CORPORATION TAX IS ALWAYS ON ITS TTP , AUGMENTED PROFIT IS TAKEN JUST T
ALSO, DON’T ADD dividend that is from your 51% company /subsidiary.
 end of the period of account.
he accounting period.

r the start of your period of accounts.

nd of the accounting period.

PROFIT IS TAKEN JUST TO KNOW IF ITS LARGE COMPANY OR NOT.

 IMPORTANT POINTS TO REMEMBER:
The value of a property after its owner dies and it transfers to another person is known as PROBATE VALUE. I

As long as you are a resident of UK , you pay CGT for disposal of chargeable asset, regardless of where the ass
If you are NOT UK resident and u sold land and property ( residential /commercial ) then you have to pay CGT

TAKE WHICHEVER IS MORE:

1) SALES PRICE
2) MARKET PRICE

Capital gains tax to be paid on 31 January following the end of the accounting period , just like income tax, in

NET CHARGEABLE GAIN is BEFORE AEA/loss b.f.

HOW TO CALCULATE PAYMENT ON ACCOUNT FOR RESIDENTIAL PROPERTY:

GAIN ON RESIDENTIAL PROPERTY XXXX

(-)LOSS B4 SALE OF RESIDENTIAL PROPERTY(CY) (XXXX)
(-)AEA -12300
(-) LOSS BROUGHT FORWARD (XXXX)
XXXX
CGT= XXXX * %

WASTING CHATTELS ARE THOSE with life expectancy less than 50 YEARS.
nown as PROBATE VALUE. It becomes like original cost.

regardless of where the asset is located.

) then you have to pay CGT.

od , just like income tax, in One installment.

IMPORTANT NOTES TO REMEMBER:

The following are exempt:

Listed govt securities(gilt- edged securities or guilts) bonds.
Qualifying coroporate bonds.(debentures)
shares held in an ISA.

To convert pens to pound, divide pens by 100.

(exception for married couples , where cost incurred by one spouse = the cost incurred by other)
ed by other)
Sales proceeds 50000
less:
shares acquires in 30 days -60000
shares from pool 9713
-288

no of shares
shares sold on 18 dec 2020 11000

shares aquired on the same day 0

shares acquired within 30 days -2000
9000
share pool -9000
0

Share pool no of shares cost

ordinary shares on 6 april 2005 8000 7450

ordinary shares on 12 dec 2013 4000 5500

12000 12950
disposal (18 dec 2020) -9000 -9713 cost
balance c.f 3000 3238

chargeable gain on shares of 10 jan 2021

proceeds (2000*50000)/11000 9091

less:
cost -6000
chargeable gain 3091

chargeable gain for the pool

proceeds (9000*50000)/11000 40909

less:
cost -9713
chargeable gain 31197

total chargeable gain 34288

share pool : no of shares cost

shares on 16 april 2002 2000 10000
shares on 30 april 2016 1500 18000
shares on 31 may 2016 500 7000
4000 35000
disposal (31 jan 2021) -3300 -28875
balance c.f 700 6125

no of shares
shares sold 3500
less: acquired on the same day 0
aquired within next days -200
3300
share pool -3300
0

chargeable gain of shares on 10 feb 2021

proceeds (200*70000)/3500 4000 3500 70000

less: 3300
cost of the 200 shares -3600
chargeable gain 400

chargeable gain for the cost pool

proceeds (3300*70000)/3500 66000

less:
cost of the 3300 shares -28875
chargeable gain 37125

total chargeable gain 37525

share pool
 no of shares cost
Apr-07 1000 11000
Sep-19 500 3000
1500 14000
disposal cost 1200 11200
balance c.f 300 2800

disposal proceeds 46000

less
cost -11200
chargeable gain 34800

no of shares
ordinary share 20000 1 each
after reorganisation: MV original cost
ordinary share 20000 1.8 36000 13846
preference 20000 0.8 16000 6154
52000 20000
disposal proceeds 75000
lesss
cost -13846
61154

no of shares cost
ordinary shares 2000 5000

after reorganisation: MV cost

ordinary shares 4000 8000 4000
preference shares 2000 2000 1000
6000 10000 5000

Disposal proceeds 11000

less:
cost -4000
chargeable gain 7000

no of shares cost
10000 20000
after reorganisation
MV COST
shares 20000 25000 16667
cash r/d 10000 5000 3333
30000 20000

disposal proceeds 5000

less:
cost -3333
chargeable gain 1667

25000 20000

mv 87500 14894
cash rc 30000 5106
117500 20000

disposal proceeds 30000

less:
cost -5106
24894
 IMPORTANT POINTS TO REMEMBER BY :

Letting relief is lower of :

1) £ 40,000
2) the amount of PRR relief.
3) The amount of gain for occupied

Lifetime BADR relief limit is 1 million. Rlief must be claimed within 12 months of the following 31 Jan.
You should have started the business atleast 2 years before inorder to qualify for BADR relief.

To claim IR (investor's relief) , you should subscribe to the shares on or after 17 March 2016.
nths of the following 31 Jan.
alify for BADR relief.

fter 17 March 2016. (Refer page 696)