ACCA TX ^UK Syllabus B. Income Tax And Nic Liabilities - Relief for trading losses - Past Papers ^{7 / 8}

Ashura has been employed by Rift plc since 1 January 2013. She has also been self-employed since 1 July 2015, preparing her first accounts for the nine-month period ended 5 April 2016. The following information is available for the tax year 2015–16:

Employment
(1) During the tax year 2015–16, Ashura was paid a gross annual salary of £56,200.

(2) On 1 January 2016, Ashura personally paid two subscriptions. The first was a professional subscription of £320 paid to an HM Revenue and Customs’ (HMRC’s) approved professional body. The second was a subscription of £680 to a health club which Ashura regularly uses to meet Rift plc’s clients. Ashura was not reimbursed for thecosts of either of these subscriptions by Rift plc.

(3) During the tax year 2015–16, Ashura used her private motor car for business purposes. She drove 3,400 miles in the performance of her duties for Rift plc, for which the company paid her an allowance of 55 pence per mile.

(4) During the tax year 2015–16, Ashura contributed £2,800 into Rift plc’s HMRC registered occupational pension scheme and £3,400 (gross) into a personal pension scheme.

Self-employment
(1) Ashura’s tax adjusted trading loss based on her draft accounts for the nine-month period ended 5 April 2016 is £3,300. This figure is before making any adjustments required for:

(i) Advertising expenditure of £800 incurred during January 2015. This expenditure has not been deducted in calculating the loss of £3,300.

(ii) The cost of Ashura’s office (see note (2) below).

(iii) Capital allowances.

(2) Ashura runs her business using one of the five rooms in her private house as an office. The total running costs of the house for the nine-month period ended 5 April 2016 were £4,350. No deduction has been made for the cost of the office in calculating the loss of £3,300.

(3) On 10 June 2015, Ashura purchased a laptop computer for £2,600.

On 1 July 2015, Ashura purchased a motor car for £19,200. The motor car has a CO2 emission rate of 137 grams per kilometre. During the nine-month period ended 5 April 2016, Ashura drove a total of 8,000 miles, of which 2,500 were for self-employed business journeys.

Other information
Ashura’s total income for the previous four tax years is as follows

Required:
(c) Explain why it would not be beneficial for Ashura to claim loss relief under the provisions giving relief to a loss incurred in the early years of trade.

Note: You should assume that the tax rates and allowances for the tax year 2015–16 also applied in all previous tax years. (2 marks)

Ashura has been employed by Rift plc since 1 January 2013. She has also been self-employed since 1 July 2015, preparing her first accounts for the nine-month period ended 5 April 2016. The following information is available for the tax year 2015–16:

Employment
(1) During the tax year 2015–16, Ashura was paid a gross annual salary of £56,200.

(2) On 1 January 2016, Ashura personally paid two subscriptions. The first was a professional subscription of £320 paid to an HM Revenue and Customs’ (HMRC’s) approved professional body. The second was a subscription of £680 to a health club which Ashura regularly uses to meet Rift plc’s clients. Ashura was not reimbursed for thecosts of either of these subscriptions by Rift plc.

(3) During the tax year 2015–16, Ashura used her private motor car for business purposes. She drove 3,400 miles in the performance of her duties for Rift plc, for which the company paid her an allowance of 55 pence per mile.

(4) During the tax year 2015–16, Ashura contributed £2,800 into Rift plc’s HMRC registered occupational pension scheme and £3,400 (gross) into a personal pension scheme.

Self-employment
(1) Ashura’s tax adjusted trading loss based on her draft accounts for the nine-month period ended 5 April 2016 is £3,300. This figure is before making any adjustments required for:

(i) Advertising expenditure of £800 incurred during January 2015. This expenditure has not been deducted in calculating the loss of £3,300.

(ii) The cost of Ashura’s office (see note (2) below).

(iii) Capital allowances.

(2) Ashura runs her business using one of the five rooms in her private house as an office. The total running costs of the house for the nine-month period ended 5 April 2016 were £4,350. No deduction has been made for the cost of the office in calculating the loss of £3,300.

(3) On 10 June 2015, Ashura purchased a laptop computer for £2,600.

On 1 July 2015, Ashura purchased a motor car for £19,200. The motor car has a CO2 emission rate of 137 grams per kilometre. During the nine-month period ended 5 April 2016, Ashura drove a total of 8,000 miles, of which 2,500 were for self-employed business journeys.

Other information
Ashura’s total income for the previous four tax years is as follows

Required:
(d) Assuming that Ashura claims loss relief against her total income for the tax year 2015–16, calculate her taxable income for this tax year. (5 marks)

Required:
On the assumption that Gregor relieves his trading loss of £68,800 as early as possible, calculate the amount of trading loss carried forward to the tax year 2015–16.

Note: You should assume that the tax allowances for the tax year 2014–15 apply throughout. (4 marks)

Naomi is self-employed. For the year ended 5 April 2015 she made a trading loss of £110,000, having made a trading profit of £24,000 for the year ended 5 April 2014. Naomi also had employment income of £92,000 for the tax year 2013–14.

What is the maximum loss relief claim which Naomi can make against her total income for the tax year 2013–14?

A. £74,000
B. £50,000
C. £110,000
D. £29,000

Hong has been in self-employment since 2001, preparing accounts to 5 April. For the year ended 5 April 2013 she made a trading loss of £45,800, and has claimed this against her total income and chargeable gain for the tax year 2011–12.

For the year ended 5 April 2012 Hong made a trading profit of £29,700. She also has a property business profit of £3,900 for the tax year 2011–12. Hong has an unused trading loss of £2,600 brought forward from the tax year 2010–11.

During the tax year 2011–12 Hong disposed of an investment property and this resulted in a chargeable gain (before the annual exempt amount) of £17,800. Hong has unused capital losses of £6,200 brought forward from the tax year 2009–10.

Required:
After taking account of the loss relief claims made, calculate Hong’s taxable income and taxable gain for the tax year 2011–12, and state the amount of any trading loss carried forward.

Note: You should assume that the tax allowances for the tax year 2012–13 apply throughout. (5 marks)