Taxation: UK Finance Act 2013, 19th ed.
 

Book Title

By: Alan Melville
January 2014
Pearson Education
Distributed by Trans-Atlantic Publications Inc.
ISBN: 9780273789260
610 Pages
$110.00 Paper Original


Description:

Now in its 19th annual edition, Melville’s Taxation continues to be the definitive, market-leading text on UK taxation. This text serves as a comprehensive guide for students taking a first level course in the subject. Featuring clean, uncluttered prose and a wealth of immensely practical examples, this edition brings the book completely up to date with the provisions of the Finance Act 2013.

Comprehensively updated to reflect the Finance Act 2013, including:

• General Anti-Abuse Rule (GAAR) in detail

• Reform of age-related allowances

• PAYE RTI (Real Time Information)

• Employee shareholder status

• Changes to company car tax

• Cash basis for small businesses

• Temporary ten-fold increase in AIA

• Limit on income tax reliefs

• Employment allowance

• New rules on R&D tax credits

• Patent Box

• Statutory Residence Test (SRT)

This book will be of value to both undergraduate and professional students of business and accounting, and will be particularly useful for students preparing for the following examinations:

ICAEW Professional Stage, Principles of Taxation; Taxation; ACCA Fundamentals Level, Taxation; ACCA Technician Scheme, Foundations in Taxation; CIPFA Diploma Stage, Public Finance and Taxation; AAT Level 4 Diploma, Personal Tax and Business Tax; ATT Certificates, Personal Taxation; Business Taxation and Accounting Principles; AIA Foundation Level, Auditing and Taxation; IFA Diploma, Principles of Taxation.

Contents:

Preface ix

Acknowledgements x

Summary of tax data xi

Part 1 INCOME TAX AND NATIONAL INSURANCE

1 Introduction to the UK tax system 3

UK taxes 3

Sources of tax law 4

The tax year 6

Structure of HM Revenue and Customs 6

Administration of the tax system 7

Self Assessment 7

Appeals 11

The HMRC Charter 12

Tax evasion 13

Tax avoidance 13

2 Introduction to income tax 15

Taxable persons 15

Classification of income 16

Exempt income 17

Structure of an income tax computation 18

Married couples and civil partners 19

Rates of income tax for 2011-12 19

Income taxed at source 20

Savings income 22

Dividends from UK companies 26

3 Personal allowances 31

Personal allowances for 2011-12 31

The personal allowance 32

Blind person's allowance 34

Tax reducers 34

Married couple's allowance 35

4 Payments and gifts eligible

for tax relief 42

Payments and gifts deductible from

total income 42

Eligible interest payments 48

Annual payments and patent royalties 48

Gifts of shares or property to charity 49

Payments which are tax reducers 49

Maintenance payments 50

Loans used to purchase a life annuity 50

Gift Aid 51

5 Income from property 55

Definition of property income 55

Basis of assessment and allowable expenditure 56

Capital expenditure 57

Losses 58

Lease premiums 59

"Rent-a-room" relief 62

Furnished holiday lettings 62

6 Income from savings and investments 67

Interest received 67

Dividends received 69

Tax-efficient investments 70

Individual Savings Accounts 70

Enterprise Investment Scheme 72

Venture Capital Trusts 73

Community investment tax credits 74

Child Trust Funds 74

Income from trusts and settlements 75

Miscellaneous income 78

7 Income from employment (1) 81

Employment and self-employment 81

Basis of assessment 84

Employment income 84

Non-taxable employment income 85

Allowable expenses 87

Payments made on termination of

employment 90

The PAYE system 92

Construction industry scheme 96

Employee incentive schemes 97


8 Income from employment (2) 102

Benefits in kind 102

Benefits assessable on all employees 103

Special rules for P11D employees 105

9 Income from self-employment:

Computation of income 115

The badges of trade 115

The calculation of trading profits 117

Deductibility of expenditure 118

Disallowed expenditure 118

Allowable expenditure 121

Trading income not in the accounts 124

Non-trading income in the accounts 124

Expenditure not in the accounts 124

Post-cessation receipts 125

10 Income from self-employment:

Basis periods 130

The current year basis 130

Commencement of trade 131

Cessation of trade 134

Change of accounting date 136

Transitional overlap relief 140

Averaging of trading profits 141

11 Income from self-employment:

Capital allowances 148

Eligible expenditure 148

Chargeable periods 148

Plant and machinery 149

Capital allowances on plant and

machinery 151

Writing down allowance 152

Annual investment allowance 156

First year allowance 157

Balancing allowances and charges 161

Non-pooled assets 161

Allowances on cessation of trade 166

Industrial buildings and agricultural

buildings 167

Miscellaneous capital allowances 169

12 Income from self-employment:

Trading losses 174

Relief for trading losses 174

Carry-forward trade loss relief 175

Trade loss relief against total income 177

Early trade losses relief 180

Non-active traders 182

Terminal trade loss relief 182

Post-cessation trade relief 184

Transfer of a business to a company 185

Losses on shares in unlisted trading companies 185

13 Income from self-employment:

Partnerships 188

Principles of partnership taxation 188

Notional profits and losses 191

Change in partnership composition 192

Non-trading income 194

Trading losses 195

14 Pension contributions 200

Registered pension schemes 200

Tax relief for contributions

by scheme members 202

Tax relief for contributions

by employers 205

Annual allowance charge 207

Lifetime allowance charge 210

15 Payment of income tax, interest

and penalties 215

Payment of income tax 215

Late payment penalties 217

Interest on income tax 219

Penalties 220

16 National Insurance contributions 224

Class 1 224

Class 1A 230

Class 1B 230

Class 2 231

Class 3 231

Class 4 232

Annual maximum contributions 233

Review questions (Set A) 237

Part 2 CAPITAL GAINS TAX

17 Introduction to capital gains tax 247

Chargeable persons 247

Chargeable assets 248

Chargeable disposals 249

Basis of assessment 250

Rates of CGT 251

Relief for capital losses 253

Relief for trading losses 255

Administration of CGT 257

18 Computation of gains and losses 261

Layout of a CGT computation 261

Disposal value 262

Allowable expenditure 262

Part disposals 264

Assets with negligible value 266

Assets held on 31 March 1982 267

19 Chattels and wasting assets 271

The chattels exemption 271

Chattels disposed of at a loss 273

Part disposals of chattels 273

Wasting chattels 276

Wasting assets 277

Leases 279

20 Shares and securities 288

The share matching rules 288

The Section 104 holding 290

Bonus issues 293

Rights issues 294

Capital distributions 296

Takeovers 298

Gilts and qualifying corporate

bonds 300

21 Principal private residences 305

Principal private residence 305

Partial exemption 306

Deemed residence 307

Letting relief 309

Business use 311

22 CGT reliefs 314

Damaged assets 314

Destroyed assets 317

Replacement of business assets 318

Gift of business assets 321

Transfer of a business to a limited company 323

Entrepreneurs' relief 324

Reinvestment into EIS shares 327

Loans to traders 328

Review questions (Set B) 331


Part 3 CORPORATION TAX

23 Introduction to corporation tax 339

Scope of corporation tax 339

Accounting periods 340

Chargeable profits 341

Trading income 342

Income from property 349

Income from non-trading loans 349

Miscellaneous income 349

Franked investment income 351

Qualifying charitable donations 351

Loan relationships 352

Long periods of account 356

24 Corporate chargeable gains 361

Chargeable disposals and chargeable

assets 361

Basis of assessment 362

Computation of gains and losses 362

Indexation allowance 363

Assets held on 31 March 1982 366

The rebasing election 369

Assets acquired before 6 April 1965 369

Disposals of shares or securities 370

25 Computation and payment of

the corporation tax liability 383

Corporation tax financial years 383

Rates of corporation tax 384

Marginal relief 387

Due date of payment 390

Accounting for income tax deducted

at source 392

Advance corporation tax 392

Self Assessment 393

Interest on underpaid and overpaid corporation tax 394

Penalties 396

26 Corporation tax losses 400

Relief for trading losses 400

Carry forward of trade loss relief 401

Unrelieved charitable donations 402

Trade loss relief against total profits 404

Repayments of corporation tax 407

Anti-avoidance legislation 409

Choice of loss relief 409

Non-trading losses 410

27 Close companies and companies

with investment business 414

Close companies 414

Definition of a close company 414

Exceptions 417

Consequences of close company status 418

Close investment-holding companies 421

Companies with investment business 421

Unincorporated business vs close

company 422

Incorporation 427

28 Groups of companies and reconstructions 430

Associated companies 430

Transfer pricing 432

51% groups 433

75% groups 434

Group relief 435

Transfer of chargeable assets within

a group 438

Capital losses 440

Consortia 441

Company reconstructions 443

Review questions (Set C) 446

Part 4 MISCELLANEOUS

29 Value added tax (1) 455

The principle of VAT 455

Taxable persons 456

Taxable supplies 456

Exempt supplies 458

Reduced rate supplies 459

Zero rate supplies 459

The value of a supply 460

Imports and exports 463

Reverse charge procedure within

the UK 464

Registration 465

Deregistration 470

30 Value added tax (2) 473

Accounting for VAT 473

The tax point 474

Tax invoices 474

Accounting records 475

Special schemes 476

Retail schemes 479

Bad debts 480

Non-deductible input tax 481

Partial exemption 483

Administration of VAT 485

Penalties, surcharges and interest 487

31 Inheritance tax 492

Chargeable transfers of value 492

Exempt transfers 494

Potentially exempt transfers 496

IHT payable on chargeable lifetime transfers 498

IHT payable on death 500

Valuation 505

Business property relief 507

Agricultural property relief 508

Administration of IHT 509

32 Overseas aspects of taxation 512

Residence, ordinary residence and

domicile 512

Income tax - general rules 515

Double taxation relief 516

Income from employment 517

Trading income 519

Income from property and investments 520

Capital gains tax - general rules 521

Inheritance tax - general rules 522

Corporation tax - general rules 522

Controlled foreign companies 525

Double taxation relief for companies 526

Review questions (Set D) 533

Part 5 ANSWERS

Answers to exercises 541

Answers to review questions 593

Index 605