ACCA APPROVED CONTENT PROVIDER ACCA Passcards Paper F6 Taxation (UK) FAs 2015 For exams in September 2016, December 2016 and March 2017 ACF6PC16.indd 20/01/2016 17:20 (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM Page i Fundamentals Paper F6 Taxation FAs 2015 (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM First edition 2007, Tenth edition February 2016 ISBN 9781 4727 4453 e ISBN 9781 4727 4680 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by Printed in the United Kingdom BPP Learning Media Ltd, by RICOH UK Limited BPP House, Aldine Place, Unit 142–144 Uxbridge Road, Wells Place Merstham London W12 8AA www.bpp.com/learningmedia RH1 3LG Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable sustainable sources Page ii All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media © BPP Learning Media Ltd 2016 (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM Page iii Preface Contents Welcome to BPP Learning Media's ACCA Passcards for Fundamentals Paper F6 Taxation (UK) They save you time Important topics are summarised for you They incorporate diagrams to kick start your memory They follow the overall structure of the BPP Learning Media Study Texts, but BPP Learning Media's ACCA Passcards are not just a condensed book Each card has been separately designed for clear presentation Topics are self contained and can be grasped visually ACCA Passcards are still just the right size for pockets, briefcases and bags ACCA Passcards focus on the exam you will be facing Run through the complete set of Passcards as often as you can during your final revision period The day before the exam, try to go through the Passcards again! You will then be well on your way to passing your exams Good luck! Page iii (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM Page iv Preface Page 1 Introduction to the UK tax system Computing taxable income and the income tax liability Employment income 21 Taxable and exempt benefits The PAYE system 25 Pensions Contents Page Partnerships and limited liability partnerships 63 12 National insurance contributions 67 13 Computing chargeable gains 71 14 Chattels and the principal private residence exemption 79 33 15 Business reliefs 85 Property income 39 16 Shares and securities 91 Computing trading income 43 17 Capital allowances 49 Self-assessment and payment of tax by individuals 95 18 Inheritance tax: scope and transfers of value 103 Computing taxable total profits and the corporation tax liability 113 Assessable trading income 55 10 Trading losses 59 11 19 (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM Page 121 20 Chargeable gains for companies 21 Losses 129 22 Groups 133 Page v Page v Page 23 Self-assessment and payment of tax by companies 137 24 An introduction to VAT 141 25 Further aspects of VAT 151 Contents (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM Notes Page vi (001)ACF6PC13_CH01.qxp 1/21/2016 3:34 AM Page 1: Introduction to the UK tax system Topic List The overall function and purpose of taxation in a modern economy Different types of taxes Principal sources of revenue law and practice Tax avoidance and tax evasion This chapter contains background knowledge which underpins the whole of your later studies of taxation (001)ACF6PC13_CH01.qxp 1/21/2016 The overall function and purpose of taxation in a modern economy 3:34 AM Page Different types of taxes Principal sources of revenue law and practice Tax avoidance and tax evasion Economic factors Taxation represents a withdrawal from the UK economy Tax policies can be used to encourage and discourage certain types of activity Encourages Saving Charitable donations Entrepreneurs Investment in plant and machinery Social factors Tax policies can be used to redistribute wealth Direct taxes – tax only those who have these resources Indirect taxes – discourage spending Progressive taxes – target those who can afford to pay Discourages Smoking Alcohol Motoring Environmental factors Taxes may be levied for environmental reasons Climate change levy Landfill tax (001)ACF6PC13_CH01.qxp 1/21/2016 3:34 AM The overall function and purpose of taxation in a modern economy Direct taxes Indirect taxes Page Page Different types of taxes Principal sources of revenue law and practice Tax avoidance and tax evasion Income tax Individuals Partnerships Corporation tax Companies Capital gains tax Individuals Partnerships Companies (in the form of corporation tax) Inheritance tax Individuals National insurance Employers Employees Self-employed Value added tax Businesses (both incorporated and unincorporated) 1: Introduction to the UK tax system (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM VAT invoices and records Cash accounting scheme Account for VAT on basis cash paid/received Annual taxable turnover must not exceed £1,350,000 (excl VAT) To join, all VAT returns/payments must be up to date (or arrangements have been made to pay outstanding VAT by instalments) Page 156 Penalties Overseas aspects Special schemes Flat rate scheme Optional scheme for business with tax exclusive taxable turnover up to £150,000 Must leave if VAT inclusive taxable supplies exceed £230,000 Flat rate of VAT applies to total tax inclusive turnover Normal VAT invoice issued to VAT registered customers The flat rate percentage to use will be given to you in your exam (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 157 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 158 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 159 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 160 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 161 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 162 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 163 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 164 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 165 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 166 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 167 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 168 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 169 Notes (025)ACF6PC13_CH25.qxp 1/21/2016 3:43 AM Page 170 Notes ... BPP Learning Media © BPP Learning Media Ltd 2016 (000)ACF6PC13_FP_Ricoh.qxp 1/21/2016 3:34 AM Page iii Preface Contents Welcome to BPP Learning Media's ACCA Passcards for Fundamentals Paper F6. .. grasped visually ACCA Passcards are still just the right size for pockets, briefcases and bags ACCA Passcards focus on the exam you will be facing Run through the complete set of Passcards as often... kick start your memory They follow the overall structure of the BPP Learning Media Study Texts, but BPP Learning Media's ACCA Passcards are not just a condensed book Each card has been separately