Tax Compliance (UK) Flashcards

For UK income tax purposes, the personal allowance for 2024/25 is reduced by £1 for every £2 of adjusted net income above:

Answer: £100,000

The personal allowance is tapered at a rate of £1 for every £2 of adjusted net income above £100,000, resulting in a 60% effective marginal tax rate in this band and a nil allowance at £125,140.

The UK corporation tax rate for the financial year 2023 for companies with profits over £250,000 is:

Answer: 25%

From 1 April 2023, the main rate of UK corporation tax increased to 25% for companies with profits exceeding £250,000. Small profits rate of 19% applies below £50,000 with marginal relief in between.

Capital gains tax (CGT) for UK higher rate taxpayers on residential property gains is charged at:

Answer: 24%

From 30 October 2024, the CGT rate on residential property disposals for higher and additional rate taxpayers is 24% (reduced from 28%). Basic rate taxpayers pay 18%.

Which of the following is an allowable deduction for UK corporation tax purposes?

Answer: Interest on a business loan

Interest on loans used for business purposes is allowable for corporation tax (subject to corporate interest restriction rules). Customer entertaining, political donations, and depreciation are all disallowable.

For UK VAT purposes, the standard rate is:

Answer: 20%

The standard rate of VAT in the UK is 20%, applied to most goods and services. A reduced rate of 5% applies to certain supplies (e.g., domestic energy) and some supplies are zero-rated or exempt.

The UK annual investment allowance (AIA) for capital allowances is currently:

Answer: £1,000,000

The AIA provides a 100% first-year allowance on qualifying plant and machinery purchases up to £1,000,000 per year, encouraging business investment.