SANDY HOOD - PLEASE COULD YOU CHECK MY ANSWERS - THANKS
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Task 1.1
The tax return was due to be fled on the 21/12/2003 and the late penalty for not doing so is £200 + 10% of the tax payable with interest
Task 1.2.
I got a net business profit of £56,460 on the return.
Task 1.3.
Net Profit £46,400
Depreciation (£1,200)
Motor Expenses (£2,160)
Capital Allowances (£2,480)
Adjusted Schedule DI £46,920
Task 1.4.(a)
I got 3/12 x £46,920 = £11,730
Task 1.4.(b)
I got 9/12 x £46,920 = £35,190
Task 1.5.
I got £11,730 + (£35,190/2) = £29,325
Task 1.6.
Class 2 - £2.05 x 52 weeks = £106.60
Class 4 - (£29,325 - £4,745) x 8% = £1966.40
Total NIC Payable = £2,073
Task 1.7.
Than you for your email dated 04/12/2005.
Please note that industrial building allowances only apply to building that are used for industrial purposes.
Industrial Building Allowances for new buildings
IBA's are given to new industrial buildings from the date that the building is brought into for industrial use. The IBA is only given for the first 25 years and it is only given on the eligible cost (original cost). So for the building you are looking at the IBA would be £2,000 per year for 25 years. The allowance would then come off your taxable income , just like capital allowances do, thus reducing your profits chargeable to tax.
Industrial Building Allowances for second purchaser
For second buyers of an industrial building the IBA is calculated on the original cost (i.e. what the seller paid for it when he first bought it) over the remaining life. So for the building you are looking at the IBA is £2,500.
I hope this answers your queries.
Kind Regards
AAT Student
Task 2.1.(a)
I got the WDA as £450 (£3,000 x 9/12 x 0.20)
The FYA was at 50% and came to £8,750.
The total capital allowances was £9,200
Task 2.1.(b)
Adjusted Trading Profit £25,000
Capital Allowances (£9,200)
Schedule D Adjusted Profit £15,800
Task 2.2.
Proceeds £25,000
Cost (£10,000)
Gain £15,000
Taper Relief (£15,000)
Gain / Loss on Disposal £0
Task 2.3.
Schedule D £15,800
Schedule A £4,500
PCTCT £20,300
Task 2.4.(a)
£20,300 x 19% = £3,857
M.R. (£50,000 - £20,300 X 19/400) = (£1,411)
C.T. Payable on 31/07/2005 £2,446
Task 2.4.(b)
£20,300 x 19% = £3,587 C.T. Payable on 31/07/2005
Task 2.5.
Purchasing of an associate company will affect the tax computation for Harrison Ltd. This is because, both, the upper and lower tax limits will be divided equally between Harrison Ltd. and the associate company.
So the tax brackets would be:
£1,500,000 = £750,000
£300,000 = £150,000
£50,000 = £25,000
£10,000 = £5,000
So, for example the corporation tax payable for the period ended 31/12/2005 would be £3,634 (see calculation below) instead of £2,446, thus in creasing the tax payable
£20,300 x 19% = £3,857
M.R. (£25,000 - £20,300 x 19/400) = £223
C.T. Payable = £3,634
However, it all depends on the profits for the next tax year.
I hope this helps.
Regards
Accounting Technician
The tax return was due to be fled on the 21/12/2003 and the late penalty for not doing so is £200 + 10% of the tax payable with interest
Task 1.2.
I got a net business profit of £56,460 on the return.
Task 1.3.
Net Profit £46,400
Depreciation (£1,200)
Motor Expenses (£2,160)
Capital Allowances (£2,480)
Adjusted Schedule DI £46,920
Task 1.4.(a)
I got 3/12 x £46,920 = £11,730
Task 1.4.(b)
I got 9/12 x £46,920 = £35,190
Task 1.5.
I got £11,730 + (£35,190/2) = £29,325
Task 1.6.
Class 2 - £2.05 x 52 weeks = £106.60
Class 4 - (£29,325 - £4,745) x 8% = £1966.40
Total NIC Payable = £2,073
Task 1.7.
Than you for your email dated 04/12/2005.
Please note that industrial building allowances only apply to building that are used for industrial purposes.
Industrial Building Allowances for new buildings
IBA's are given to new industrial buildings from the date that the building is brought into for industrial use. The IBA is only given for the first 25 years and it is only given on the eligible cost (original cost). So for the building you are looking at the IBA would be £2,000 per year for 25 years. The allowance would then come off your taxable income , just like capital allowances do, thus reducing your profits chargeable to tax.
Industrial Building Allowances for second purchaser
For second buyers of an industrial building the IBA is calculated on the original cost (i.e. what the seller paid for it when he first bought it) over the remaining life. So for the building you are looking at the IBA is £2,500.
I hope this answers your queries.
Kind Regards
AAT Student
Task 2.1.(a)
I got the WDA as £450 (£3,000 x 9/12 x 0.20)
The FYA was at 50% and came to £8,750.
The total capital allowances was £9,200
Task 2.1.(b)
Adjusted Trading Profit £25,000
Capital Allowances (£9,200)
Schedule D Adjusted Profit £15,800
Task 2.2.
Proceeds £25,000
Cost (£10,000)
Gain £15,000
Taper Relief (£15,000)
Gain / Loss on Disposal £0
Task 2.3.
Schedule D £15,800
Schedule A £4,500
PCTCT £20,300
Task 2.4.(a)
£20,300 x 19% = £3,857
M.R. (£50,000 - £20,300 X 19/400) = (£1,411)
C.T. Payable on 31/07/2005 £2,446
Task 2.4.(b)
£20,300 x 19% = £3,587 C.T. Payable on 31/07/2005
Task 2.5.
Purchasing of an associate company will affect the tax computation for Harrison Ltd. This is because, both, the upper and lower tax limits will be divided equally between Harrison Ltd. and the associate company.
So the tax brackets would be:
£1,500,000 = £750,000
£300,000 = £150,000
£50,000 = £25,000
£10,000 = £5,000
So, for example the corporation tax payable for the period ended 31/12/2005 would be £3,634 (see calculation below) instead of £2,446, thus in creasing the tax payable
£20,300 x 19% = £3,857
M.R. (£25,000 - £20,300 x 19/400) = £223
C.T. Payable = £3,634
However, it all depends on the profits for the next tax year.
I hope this helps.
Regards
Accounting Technician
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