Tutor Notes: ACCA Paper F6

Tutor
Notes
ACCA Paper F6
Taxation (UK) FA 2011
For exams in June 2012 and December 2012
To be used with the BPP Study Text for exams in June 2012 and
December 2012 (FA 2011 edition)
First edition 2009

Fourth edition 2012
ISBN 9781 4453 2515 6
(Previous edition 9781 4453 2054 0)
British Library Cataloguing-in-Publication Data

A catalogue record for this book
is available from the British Library
Published by
BPP Learning Media Ltd
BPP House, Aldine Place
London W12 8AA
All our 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 Ltd.
www.bpp.com/learningmedia
BPP Learning Media Ltd

2012
ii
So what are the benefits of our Tutor Notes?

page iv
How do I use the Tutor Notes?
page v
CONTENTS
Teaching session planners

page ix
chapter 1
INTRODUCTION TO THE UK TAX SYSTEM
page 1
chapter 2
THE COMPUTATION OF TAXABLE INCOME AND
THE INCOME TAX LIABILITY
page 11
chapter 3
EMPLOYMENT INCOME
page 23
chapter 4
TAXABLE AND EXEMPT BENEFITS.
THE PAYE SYSTEM
page 31
chapter 5
PENSIONS
page 41
chapter 6
PROPERTY INCOME
page 49
chapter 7
COMPUTING TRADING INCOME
page 55
chapter 8
CAPITAL ALLOWANCES
page 61
chapter 9
ASSESSABLE TRADING INCOME
page 71
chapter 10
TRADING LOSSES
page 77
chapter 11
PARTNERSHIPS AND LIMITED LIABILITY
PARTNERSHIPS
page 85
chapter 12
NATIONAL INSURANCE CONTRIBUTIONS
page 91
chapter 13
COMPUTING CHARGEABLE GAINS
page 97
chapter 14
CHATTELS AND THE PRINCIPAL PRIVATE
RESIDENCE EXEMPTION
page 113
chapter 15
BUSINESS RELIEFS
page 121
chapter 16
SHARES AND SECURITIES
page 131
chapter 17
SELF-ASSESSMENT AND PAYMENT OF
TAX BY INDIVIDUALS
page 139
chapter 18
INHERITANCE TAX
page 151
chapter 19
TAXABLE TOTAL PROFITS
page 165
chapter 20
COMPUTING THE CORPORATION TAX
LIABILITY
page 177
chapter 21
CHARGEABLE GAINS FOR COMPANIES
page 183
chapter 22
LOSSES
page 193
chapter 23
GROUPS
page 199
chapter 24
OVERSEAS MATTERS FOR COMPANIES
page 205
chapter 25
SELF-ASSESSMENT AND PAYMENT OF
TAX BY COMPANIES
page 213
chapter 26
AN INTRODUCTION TO VAT
page 219
chapter 27
FURTHER ASPECTS OF VAT
page 235
Introduction
iii
INTRODUCING
BPP LEARNING MEDIAS
TUTOR NOTES
BPP Learning Medias Tutor Notes for the ACCA qualification have been developed under the
guidance of experienced tutors from BPPs classroom courses division and have been written by
tutors with many years experience of teaching ACCA students.
The Notes have been specially configured to add value in all the different teaching environments in
which BPP Learning Media materials are used throughout the world. We pilot tested the concept in
front of BPP students using a variety of technologies reflecting the range available in adopting
colleges and we refined them. Whether you are using a chalkboard or a smartboard, we are
confident these notes will enhance any course, help students pass their ACCA exams and that you
will find students recommending your courses to their friends.
So what are the benefits of our Tutor

notes?
Benefit 1: High standard of professional course
presentation
Students remember how their tutors performed in the classroom and they keep the course notes
their college gives them and show them to friends. Our Tutor Notes will enhance the impression you
make on your students and their friends impression of your college.
With notes, graphics and carefully written Learning Examples pre-prepared, you can devote
your preparation time to deciding how to enhance your delivery, motivate interest and help
individual learners.
Because our Tutor Notes are produced by the market-leading ACCA publisher they have a
consistent, professional appearance.
(The Passcards graphics used in the notes are available on request as PDFs, so you can incorporate
multimedia in your classrooms. This format means they can be enlarged and printed for attachment
to chalkboards, made into acetates, projected from beamersor displayed on smartboards.)
Benefit 2: Flexibility, so you can add value as you

see fit
Unlike other course notes, our Tutor Notes do not impose someone elses script on you. Instead
they use Passcards graphics to highlight the essential knowledge elements of each topic and useful
Learning Examples to convey and reinforce the learning. Experienced tutors will add value in their
own ways. And tutors new to the subject have the reassurance of discreet expert guidance on ways
to deliver the topic and the key points to make.
iv
Benefit 3: The right format

The Tutor Notes are designed to be used as part of the tried-and-tested approach of paper media,
text books and good tutors in classrooms. You dont need to register your students with us and we
dont expect them to rely on the Internet to read their books. If you adopt our study materials, the
Tutor Notes can be hosted on your network. On request, we can facilitate this and provide
multimedia support right up to full hosted virtual learning environments. We know you will choose
the formats that are right for you - and we are ready to help.
Benefit 4: Unique integration

Tutor Notes follow the same sequence as our Official Publisher Study Text for the subject. Each
topic is covered in the same consistent way and the Notes provide signposts to you and your
students on where to look in the Study Text for more information and question practice.
Benefit 5: Continuity
Where courses are team-taught, or where tutors change mid-programme, the Tutor Notes provide
continuity because tutors can see how far their colleagues have progressed through the course. And
for students who miss classes, the notes provide a ready record of what they have missed.
How do I use the Tutor Notes?

Your students must bring their BPP Study Texts to each session as we recommend you incorporate
material and features from the Study Text into your teaching.
One set of notes for you, one for your students

You will actually be provided with two sets of notes for each subject.
Student Notes are arranged in double-page spreads, with the Passcards diagram for each
topic on the left-hand side (LHS) and some introductory context and Learning Examples
(essentially classroom questions) on the right-hand side (RHS).
Tutor Notes are page-for-page the same as the Student Notes. They reproduce the content
of the Student Notes but the tutor version also has annotations to the Passcards diagram
and, on the RHS, additional content such as teaching and topic tips and the solutions to the
Learning Examples.
Heres what we recommend you do.
Print out and duplicate the Student Notes and provide one copy to each student as part of
their course material along with the BPP Learning Media Study Text and other adopted
media. The files are arranged so that they print out double-sided (duplex) to save paper.
However they can be printed single-sided without any changes to the PDFs we provide.
Print out one copy of the Tutor Notes for yourself, for your teaching file.
Decide whether to hand out Student Notes as one complete bank at the beginning of the
course, or session by session. Some colleges prefer to hand out Notes in instalments to
ensure that students attend all sessions.
The final chapter of the Student Notes is a bank of solutions to the Learning Examples used
in the teaching sessions. You may prefer to hold these in reserve so that students attempt
the Learning Examples rather than look for answers in the back of the Notes.
Introduction
Session planning
The Notes are arranged as chapters in the same order as the BPP Learning Media Study Text and
other resources for the subject. Chapters are topic based, and because topics vary in complexity
the chapters are of varying length. A teaching session may cover several short chapters or it may
not be long enough to cover a long chapter on a complex topic. Recommended session plans for
condensed (three-day) and full-length (six-day) courses, showing how chapters may be covered,
are shown on page ix onwards. These session plans can be adapted to fit the length of course your
college offers.
Teaching the topic

The Notes were designed, and developed further following pilot sessions, to support tutors
preference for the following approach to teaching.
Step 1
Display the Passcards graphic from the LHS on a screen (more below).
Step 2
Introduce the topic by speaking around the Context note (which is also in the
Student Notes), linking it to the previous topic or explaining why it matters to the
accounting profession, the business environment or particular organisations.
Step 3
Speak about each element of the Passcards using the callouts on the Tutor Notes
version as guidance. (These annotations can be added by hand to the graphic on
screen for the students to copy into their notes (more below)).
Step 4
Return to the RHS of the Tutor Notes and speak around the Key Learning Points to
add emphasis and reassure students on what is important. Students can be
encouraged to take their own notes.
Step 5
Topic Tips can be used in various ways. Stating how and when the topic was
examined focuses the student and provides reassurance that the tutor knows the
exam.
Step 6
The Learning Examples are written especially for the Notes, they do not appear in
any other BPP Learning Media product. They provide illustrations or reinforcement of
the topic. Set them for the class to attempt and then debrief them before moving on
(more below).
Displaying the Passcard graphics

It is not essential that your college has the technology to display the Passcards graphics from the
LHS of the Tutor Notes. The Student Notes do include these and, in pilot testing, tutors were able to
provide perfectly intelligible lectures by referring students to them. The ability to display the
graphics to the class, and - probably more importantly - to annotate them, does improve the quality
of presentation, however.
Tutors in our pilot studies who were not able to display the Passcards graphic used several devices
to help students to understand which part of the graphic was being referred to.
Referring to the Passcards using a clockface metaphor, such as The points about x at 12
oclock to refer to something at top-centre of the graphic
Reading out the wording from the graphic slowly before talking about it
Holding up the LHS of their Tutor Notes (or those of a student in the front row to avoid the
class seeing the tutors crib notes on the Tutor Notes version)
Other technologies that can be used to display the Notes include:

Tablet PC connected to a beamer. We have found this to be the best technology. Converting the
Student Notes into Journal documents means that you can annotate the graphics and fill in Learning
Example solutions using the tablet, and students can copy your annotations and solutions into their
Notes. To do this open the PDF, select Print, choose Journal Note Writer and then once it has
converted you can save it to the PC. This approach also allows you to save the Journal file from the
lesson with the annotations and solutions. Students might ask for these to be emailed to them but
this raises two problems:
vi
The files are very large and will crash many email accounts.
The student will need to have Journal reader on their PC to read them. Journal reader is
available as a free download from the Microsoft site but obtaining it can present difficulties,
particularly on work machines if the employers IT security policy forbids downloads.
Hosting the Journal files on a colleges virtual learning environment may overcome the problem of
download size. For convenience the Student Notes are provided as a single PDF. This means that
you cannot post individual chapters but will have to re-use the same Journal file at each meeting of
the class and re-post to the VLE.
Conventional PC connected to a beamer. Displaying the PDF of the Student Notes helps
students navigate through their own notes and enables you, the tutor, to point at the Passcards
with a light-pointer or your hands. Without additional software and a tablet to write on it is not
possible to annotate the notes, however.
Printed on to acetate and used on an OHP. This is more effective than using a PC if you are
unable to annotate the projected image from the PC. Putting the acetate under a screen roll or
clean acetate on the OHP means that you can annotate without having to clean or reprint the
acetate with the Passcards graphic on it. You can use colour to emphasise points and you could well
find that your handwriting is better compared to when using PC tablets.
Printed out as an enlarged diagram and attached to chalkboard. The Notes are A4 format.
These can be enlarged to A3 on most photocopiers but even at double-size these are not legible
from a distance. So why not trim round the Passcards graphic, fix it to the middle of the chalkboard
and then write the call-outs at a legible size on the chalkboard outside the paper graphic. Students
can look at their notes, see where you are indicating and add in the call-out.
Using the Learning Examples in the Student Notes

The Learning Examples have been specially written to reinforce the Key Learning Points for each
Passcards graphic. Whilst not necessarily reflecting the types of question that your students could
face in the exam, they are an excellent means within a classroom environment of testing key points
that will form part of the larger questions that appear in exam papers. They also provide you with
an opportunity to encourage discussion and explore issues, and enable you to circulate amongst the
students to check their understanding of topics - for example by looking over their shoulder at what
they are writing or by listening to conversations about discussion Learning Examples.
The icons beside the Learning Examples denote our recommendations on how each may be used.
Pen icon
This denotes a Learning Example where students should produce a written response. This will
probably involve calculations, the completion of pro-formas or the evaluation or discussion of a
problem.
Some Learning Examples require brief written answers that can be fitted into the space provided on
the RHS of the Student Notes. Others will have longer solutions and so you should advise students
to write solutions on file paper and to insert this behind the relevant page of their Notes.
A successful strategy is to set the Learning Example and to provide the students with time to
complete it. Circulate amongst the students and youll be able to determine how the class is coping
with it.
It might be generally understood and you wont need to intervene.
It may be causing general problems for the class. In this case you may decide to call a halt
and to give guidance on how to interpret the question and/or how to develop the solution.
Difficulties might be experienced by a few students. In this case you can help each
individually or, if it is the same difficulty, gather together the students and provide help to
them as a group.
Debriefing written Learning Examples can be done by open discussion, working through on the
board/screen, or by directing students to turn to the solution at the back of the Student Notes. In
each case a vital part of the learning process will be to encourage students to ask questions about
things they are unsure of. In some subjects there will be no single correct solution and so
discussion of alternative answers should be encouraged (providing their interpretation of the
question is right and the points being made are valid).
Introduction
vii
Discussion icon
Discussion Learning Examples are principally for reinforcing knowledge and will be more valuable in
some subjects than others. If students query the value of these Examples, given that their ACCA
exams are written papers, you can emphasise that:
Discussion helps them through the process of analysing the problem and formulating a
solution, which is what they will need to do in the exam, but they should remember that
discussing it is much quicker than writing it down.
Discussion can raise far more points than can a single written solution and many students
fail their ACCA exams in this sort of subject because they cannot think of sufficient points.
Explaining their thinking to other students helps them to develop effective

communication.
Hearing about topics in the context of the different work experiences of other students shows
them ways to apply knowledge to unfamiliar contexts in the exam.
Facilitating discussion Learning Examples can be done in several ways and changing the approach
provides variety for students.
Open class discussion. Set the Learning Example and then throw it open to the class for
discussion. It helps if you note down salient contributions on the board/screen. A key tutor skill
here is the ability to listen to what the student says and to develop, articulate or clarify what they
mean without appearing to suggest their contribution is inadequate. Praising them and saying so to
capture that in a quick note and writing it down in a clearer way is effective. The problem with
this approach is that some students wont contribute because you, the tutor, already know the
answer or because they are too shy to do so. Generally speaking, open class discussions are most
effective with small class sizes.
Small group discussion. Break the class into groups of four or five and set the Learning Example
to each to discuss. Discussion will be better if a time limit is set for the exercise and they are told
that they have to appoint someone to read out what they decide - the person appointed to speak
will ensure the discussion progresses. You should circulate around the groups after a few minutes
and discreetly listen to what is being said. Stir the pot with comments to a group, or to the room at
large, such as one group had an interesting idea or some of you are taking a very interesting
approach to this before contributing something to help them (whether or not any group had
actually come up with it themselves). Asking students to prepare and give elaborate presentations
on their findings tends to alienate students; they see it as a waste of time because the ACCA does
not assess students using presentations.
Web icon
These denote Learning Examples that require students to research from the Internet. They are used
very sparingly because it may be difficult for colleges to assure Internet access for classes of
students, but they can sometimes be set for homework.
viii
Teaching session planners

Our planners are based on 90-minute sessions this really is as long as you can expect your
students to concentrate without a break over two types of course.
A condensed three day course (so 12 sessions)
A full-length six-day course (so 24 sessions)
Obviously your course might be structured differently but you should be able to adapt the planners
we have provided as necessary.
Condensed course
Session
Chapters
Learning examples
Additional materials
1 and 2
1.1 to 2.6
Study text question bank

questions 1 to 3
3 and 4
3.1 to 4.4

questions 4 and 5
5 and 6
5.1 to 6.4

questions 6 to 8
7 and 8
7.1 to 8.1

questions 9 to 11
9.1 to 9.10

questions 12 to 14
10, 11 and 12
10.1 to 12.27

questions 15 to 19
13, 14 and 15
13.1 to 15.3

questions 20 to 24 and 45
16, 17 and 18
16.1 to 18.6

questions 25 to 29
19, 20 and 21
19.1 to 21.4

question 30 to 34
10
22 and 23
22.1 and 23.3

questions 35 to 37
11
24 and 25
24.1 and 25.2

questions 38, 39 and 44
12
26 and 27
26.1 to 27.3

questions 40 to 43
Introduction
ix
Standard course
Session
Chapters
Learning examples
1 and 2
1.1 to 2.1

question 1
2.2 to 2.6

question 2 and 3
3 and 4
3.1 to 4.4

questions 4 and 5
5.1 to 5.5

questions 6 and 7
6.1 to 6.4

question 8
7 and 8
7.1 to 8.1

questions 9 to 11
9.1 to 9.5

question 12
9.6 to 9.10

questions 13 and 14
10
10.1 to 10.3

question 15
10
11
11.1 to 11.7

questions 16 and 17
11
12
12.1 and 12.2

questions 18 and 19
12
13
13.1 to 13.7

question 20
13
14 and 15
14.1 to 15.4

question 21 and 22
14
16 and 17
16.1 to 17.4

questions 25, 26 and 27
15
18
18.1 to 18.6

questions 28 and 29
Session
Chapters
Learning examples
16
19
19.1 to 19.4

question 30
17
20
20.1

questions 31 and 32
18
21
21.1 to 21.4

questions 33 and 34
19
22
22.1 and 22.2

question 35
20
23
23.1 and 23.2

questions 36 and 37
21
24
24.1 to 24.3

question 38
22
25
25.1 and 25.2

question 39 and 44
23
26
26.1 and 26.5

question 40
24
27
27.1 to 27.3

questions 41 to 43
Introduction
xi
xii
chapter 1
THE OVERALL FUNCTION AND PURPOSE OF

TAXATION IN A MODERN ECONOMY
X
DIFFERENT TYPES OF TAXES
PRINCIPAL SOURCES OF REVENUE LAW AND

PRACTICE
X
TAX AVOIDANCE AND TAX EVASION
This chapter contains background knowledge which

underpins the whole of your later studies of taxation.
INTRODUCTION
TO THE UK TAX
SYSTEM
THE OVERALL FUNCTION AND PURPOSE OF TAXATION IN A MODERN ECONOMY

2
Tax rules usually change

annually
and are published in the
Finance Act
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
Economic factors
Taxation represents a withdrawal from the UK economy. Tax policies can be used to encourage and
discourage certain types of activity.
Encourages
5
5
5
5
saving
charitable donations
entrepreneurs
investment in plant and machinery
Discourages
4 smoking
4 alcohol
4 motoring
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
Policies adopted
depend on the tax
concerned
Environmental factors
Taxes may be levied for environmental
reasons
Climate change levy
Landfill tax
Tax policies increasingly

reflect environmental
concerns
Context
When a government is setting its taxation policies it will consider various factors.
Key learning points
Social, economic and environmental factors can influence tax policies.

Environmental concerns are having an increasingly important impact on tax policies.
Learning example 1.1

Name the three factors that may affect the UK governments tax policies.
Solution 1.1
Economic
Social
Environmental
1: Introduction to the UK tax system
DIFFERENT TYPES OF TAXES
Direct taxes are charged

directly on income and
other profits of the
taxpayer
Indirectly charged
on the consumer (ie
customer) via a
supplier
Some direct taxes are

paid to HMRC on the
taxpayers behalf, eg
income tax on
employment income is
paid to HMRC by the
employer directly from
the employees salary
Context
There are a large number of taxes in the UK. Some are collected directly from the taxpayer,
although often someone else actually pays the tax to HMRC, eg income tax and NIC on employment
income is paid directly from the employees salary to HMRC by the employer. Others, such as VAT,
are charged and collected by a middle man.
Key learning points

A direct tax is charged directly on income or profits. An indirect tax is charged indirectly, for
example VAT is charged by a supplier on goods and services supplied to the consumer.

How would you explain the difference between a direct and an indirect tax?
Solution 1.2
A direct tax is collected directly by HMRC from the taxpayer, although some direct taxes are
actually paid to HMRC by someone other than the taxpayer.
Indirect taxes, eg VAT, are charged by a supplier from a customer and then paid to HMRC.
PRINCIPAL SOURCES OF REVENUE LAW AND PRACTICE

6

Different types
of taxes
Tax avoidance
and tax evasion
Structure of the UK Tax system

Treasury
Officers of Revenue and Customs
Receivables management officers
Revenue and Customs Prosecutions Office
HM Revenue and Customs

Appeals heard by
First Tier Tribunal (most cases)
Upper Tribunal (complex cases)
Practice
Sources of revenue law and practice

Law
Statute
Statutory instrument
Usually, the most

important tax statute
(Act of Parliament) each
year is the Finance Act.
Statements of practice
Extra-statutory concessions
Explanatory leaflets
Business economic notes
Revenue and Customs Brief
Internal Guidance (HMRC manuals)
Working Together
HMRC publications do
not have the force of
law
Context
There are a number of sources of tax rules. Only some of them have the force of law, while others
provide guidance, explanations and interpretations of existing law.
Key learning points
Acts of Parliament and Statutory Instruments are the legislative tax rules which are
supplemented by case law.
HMRC give guidance on the legislative rules via Statements of Practice, Extra Statutory
Concessions, Explanatory Leaflets etc

Which of the following have the force of law?
(a)
(b)
(c)
(d)
(e)
(f)
Extra Statutory Concessions

Finance Act 2011
Income Tax Act 2007
HMRC manual on employment income
Statement of Practice
Case law
Solution 1.3
Items (b), (c) and (f)
TAX AVOIDANCE AND TAX EVASION
Taxpayers have an
obligation to disclose
information about their
tax affairs

Tax avoidance
and tax evasion
Tax evasion
Tax avoidance
Tax evasion consists of seeking to mislead HMRC

by either:
Tax avoidance includes any legal method of

reducing your tax burden, eg
Suppressing information, or
Using tax shelters, or
Providing deliberately false information.
Participating in schemes designed to minimise

tax.
Illegal
May lead to criminal

prosecution
Different types
of taxes
Legal
Minimise tax bill using

legitimate tax planning
methods
Context
Taxpayers are allowed to organise their tax affairs in the most efficient way for themselves.
However, they need to ensure that they stay within the law.
Key learning points
Tax evasion is deceiving HMRC, which can lead to criminal penalties.
Tax avoidance (ie using loopholes in the law) is not illegal but HMRC often closes these
loopholes once they discover how they are being used to avoid paying tax!

Which of the following is a legitimate means of minimising a taxpayers tax liability?
(a)
(b)
Tax avoidance
Tax evasion
Solution 1.4
Tax avoidance
Reinforcement
Study Text Chapter 1
10
Scan and note section 4 on tax avoidance and evasion. This is arguably the
most examinable part of the chapter. Note particularly the material in section
4.4 on the need for an ethical and professional approach
Attempt Quick Quiz
chapter 2
BASIC PRINCIPLES
CHARGEABLE/EXEMPT INCOME
DEDUCTIBLE INTEREST
COMPUTING INCOME TAX
JOINTLY HELD PROPERTY
The computation of income tax is a key exam topic.

This chapter deals with the income tax computation
which draws together all of the taxpayers income. The
following chapters will cover the rules for computing
taxable income from each different source.
THE COMPUTATION OF
TAXABLE INCOME AND
THE INCOME TAX
LIABILITY
11
BASIC PRINCIPLES
Count days if in the UK at

midnight
Basic
principles
Chargeable/
Exempt income
Put gross figures into the

income tax computation
Computing
income tax
Deductible
interest
Jointly held
property
An individual who is resident in the UK is taxable on his worldwide income.
Resident
Aggregation of income
An individual is resident in the UK if he:
Is present in the UK for 183 days or more, or

Makes visits to the UK averaging 91 days per year or
more over four consecutive years.
Net income
A basic principle of income tax is the aggregation of

income. All of an individuals income for a tax year is
added up in a personal tax computation as total income.
Taxable income
Net income minus personal allowance.
Total income minus deductible interest and trade losses.
Adjusted net income

Net income less grossed up gift aid/personal pension
contributions.
Tax liability
The amount of tax charged on income.
Tax payable
The balance of the tax liability still to be paid.
Personal allowance
Individual aged < 65
7,475 for 2011/12
Restrict if adjusted
net income > 100,000
by 1 for each 2 excess
(nil if > 114,950).
Only interest paid on a

limited number of loans
qualifies as deductible
interest (see later)
12
Individual aged > 65

9,940 age 65-74 for 2011/12
10,090 age 75+ for 2011/12
Restrict if adjusted
net income > 24,000
by 1 for each 2 excess
to minimum 7,475
(unless income > 100,000, then
restrict as for standard allowance)
Context
The aim is to produce a neat and complete income tax computation in the exam. Dont forget the
basics!
Key learning points
Always include gross figures in the income tax computation, ie inclusive of any income tax
deducted when paid.
Learn to use the correct terminology. This is essential for making a good impression on the
examiner.
The tax tables provided in the exam have some of the rates and allowances you will need.
Learn where to find these figures and try to get a feel for whats on the tables when
practising questions.
Topic tip
Question 1 will always be an income tax focused question.

The income tax computation comes up every sitting.
A common error students make is not including gross income in the computation.

Kate (aged 35) has net income of 105,000 in 2011/12.
What is the personal allowance to which Kate is entitled in 2011/12?
Solution 2.1
Net income
Less: income limit
Excess
Standard personal allowance
Less: excess
Adjusted personal allowance
105,000
(100,000)
5,000
7,475
(2,500)
4,975
2: The computation of taxable income and the income tax liability
13
CHARGEABLE/EXEMPT INCOME
Basic
principles
Chargeable/
Exempt income
Deductible
interest
Computing
income tax
Jointly held
property
Types of income
Income taxed at source
The main types of income for individuals are:
Many sorts of investment income are taxed at source:

for every 100 of income, the individual only receives
80 of interest or 90 of dividends from UK companies.
The taxable income is both cases is 100, but credit is
given for the tax suffered.
Profits of trades, professions and vocations
Income from employment and pensions
Property income
Savings and investment income, including interest

and dividends
Exempt income
Leave exempt income out of

personal tax computations.
Premium bond prizes

Income from Individual Savings Accounts (ISAs)
Returns on National Savings Certificates
Dont ignore
exempt income. Tell
the examiner that it
is exempt!
This applies to bank and

building society interest.
Tax credits on
dividends can be offset
to reduce a tax bill but
are never repaid to a
taxpayer. Tax credits on
other taxed income can
be repaid.
Always include the gross amount

in the computation.
Example: Bank interest of 80:
80 100/80 = 100 gross
So, 20 tax must have been
deducted when paid.
14
Context
It is important to distinguish between the different types of income and whether the income is
even taxable or not.
Different rules and rates apply to the different types of income (as we shall see later).
Key learning points
You must be able to spot exempt income in the exam.
Investment income will be interest and dividends in the exam.
In the income tax computation, deduct dividend tax credits before any other tax credits as
they cannot create a refund, while other tax credits can.

Simon receives bank interest of 1,860 and building society interest of 3,420 during the year. He
also received dividends of 810.
Show how much he should include for each type of income in his income tax computation and the
tax credit for each, where relevant.
Solution 2.2
There are two types of income in the question, interest and dividends, which must be dealt with
separately:
Type of income
Gross figure for

computation
Tax credit
Interest:
(1,860 + 3,420) 100/80
6,600
1,320
900
90
Dividends:
810 100/90
15
DEDUCTIBLE INTEREST
Deduct from:
(i)
(ii)
(iii)
Non-savings income, then

Savings income, then
Dividend income
Basic
principles
Chargeable/
Exempt income
Deductible
interest
Computing
income tax
Jointly held
property
Deductible interest
Interest paid on a particular type of loan is
deducted from total income to compute net
income.
For purchase of an interest in a partnership, or

For purchase of plant and machinery for
partnership (purchase must be by partner), or
For purchase of plant and machinery for use in
employment (purchase must be by employee)
These are the only

loans on which interest
is deductible in the
income tax computation
16
Context
Total up all income from all sources first. Then see if any deductions are available. The only ones
you will see in the exam are deductible interest and trading losses (see later).
Key learning points

Learn the types of loan where interest paid on it is deductible.
Topic tip
Use this easy mnemonic:
Partnership plant or machinery

Interest in a partnership
Employment plant or machinery
Plant or machinery is any asset used in a business (eg computer, tools, etc...)

Jonah, aged 45, recently became a partner and received partnership trading income of 47,000.
During the year he paid 10,750 of interest on his mortgage for his home and 800 interest on a
loan he had taken out for funds he was required to provide to join the partnership.
He received no other income during the year.
What is his taxable income?
Solution 2.3
Partnership trading income
47,000
Total income
Less: deductible interest
Net income
Less: personal allowance
Taxable income
47,000
(800)
46,200
(7,475)
38,725
17
COMPUTING INCOME TAX
Keep figures in three

separate columns
Basic
principles
Chargeable/
Exempt income
Deductible
interest
Computing
income tax
Jointly held
property
Computing income tax

1
Total non-savings, savings and dividend income separately.
Deduct deductible interest, losses and the personal allowance

from non-savings income first, then savings income then
dividend income.
At 20%, 40% and 50%
Tax non-savings income, then savings income, then dividend

income.
At 10%, 20%, 40% and 50%
Broadly interest
At 10%, 32.5% and 42.5%
The basic rate limit and higher rate limit

must be increased by the gross amount of
any gift aid donation/personal pension
contribution (amount paid 100/80).
If non-savings income does not exceed the starting rate limit, then the savings income is taxed at the starting
rate (10%) up to the starting rate limit: 2,560 for 2011/12.
There is only one set of rate bands to cover all
types of income.
Basic rate limit for 2011/12 =

35,000, higher rate limit for
2011/12 = 150,000
Gift Aid = cash
donations to charity
18
Context
Once you have added all income together you need to be able to apply the correct tax rates.
These depend on the type of income, non savings, savings or dividends, as different rates apply to
each type.
Key learning points
Learning how to set out the income tax computation is essential:
Total income
Less: deductible interest/
losses
Net income
Less: personal allowance (PA)
Taxable income
Non savings (NS)
Savings (S)
Dividends (D)
X
(X)
(X)
(X)
(X)
(X)
(X)
Tax @ 20%/ 40%/50%
Tax @ 10 %/32.5%/42.5%
BUT if NS income < 2,560, tax savings

income up to that amount @ 10% (savings rate)
Watch for gift aid donations (and personal pension contributions see later) which (both)
increase the basic rate limit and the higher rate limit by the gross amount.
Tax payable is the tax calculated less tax deducted at source.

Following on from the example of Jonah (above), how much is his tax payable?
Solution 2.4
Taxable income
38,725
35,000 @ 20%
3,725 @ 40%
Tax payable
7,000
1,490
8,490

This example appears in the Question & Answer Bank at the back of these Notes.
Solution 2.5
This solution appears in the Question & Answer Bank at the back of these Notes.
19
JOINTLY HELD PROPERTY
Civil partners are

individuals of the same sex
who have signed the official
civil partnership register
Basic
principles
Chargeable/
Exempt income
Deductible
interest
Computing
income tax
Jointly held
property
Jointly held property

Spouses and civil partners often hold property
jointly, sometimes in unequal proportions.
For tax purposes treat the income received from

such property as shared equally.
If the actual interests in the property are unequal,

spouses/civil partners can declare this to HMRC
and income is then shared in actual proportions.
Asset producing the

income is treated as
owned equally, even if
this is not, in reality, the
case
20
Context
You may see a bank account held jointly in the exam. You need to know how to deal with any
income (ie in this case, interest) received.
Key learning points
Split income 50:50 if received from assets (such as bank accounts, property, etc...) held
jointly by spouses or civil partners.
This rule never applies to earned income (such as employment or trading income).

Mr and Mrs Smith receive interest of 12,000 from their bank account, which is held in both of their
names. Mrs Smith has only put a few hundred pounds into the account since the account was set up
as she does not work.
Mr Smith also receives the following income personally:
Salary of 60,000 (from which he gives his wife 500 a month towards housekeeping money)
Dividends of 1,650
How much income should Mr Smith include in his income tax computation?
Solution 2.6
Mr Smith is taxable on all of his salary and dividends, but only on half of the bank interest. This is
the case even though Mrs Smith has clearly not put half of the bank funds into the account.
Salary
Dividends: 1,650 100/90
Bank interest: 12,000 100/80 50%
Gross income for tax computation:
60,000
1,833
7,500
69,333
21
Reinforcement
Expand notes on the personal allowance, in particular the age allowance (para
6.2), and also on computing the tax payable (paras 7.1 7.3)
Attempt Quick Quiz
Attempt all examples in the chapter and then attempt Question 1 (22 mins),
Question 2 (27 mins) and Question 3 (27 mins) in the exam question bank
Read the article Finance Act 2011 written, in part, by the Paper F6 examiner,
David Harrowven, on the ACCA website at:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archi
ve/sa_sept11_FA2011.pdf
David Harrowven has repeatedly said that it is vital that students read his Finance
Act article.
22
chapter 3
EMPLOYMENT AND SELF-EMPLOYMENT
BASIS OF ASSESSMENT
ALLOWABLE DEDUCTIONS
Although this exam is mainly computational you may

be asked to describe the difference between
employment and self-employment.
You also need to be aware of the final two topics in this
chapter: when employment income is assessed and the
deductions that you may be able to make in computing
the amount of assessable employment income.
EMPLOYMENT
INCOME
23
EMPLOYMENT AND SELF-EMPLOYMENT
Employment income is
taxable as earnings
while self employment
profits are taxable as
trading income
Employment and
self-employment
Employed or self-employed
An employee works under a contract of service and
a self-employed person under a contract for services.
Whether a contract is a contract of service or a

contract for services will depend on a number of
factors.
Look at all the

factors to decide
whether individual is
an employee or self
employed.
24
Taxpayers usually prefer

self employment as they
can deduct more expenses
from their income, so they
pay less tax, and they do not
have to pay tax each month
via the PAYE system (see
later)
Basis
of assessment
Allowable
deductions
Factors
The degree of control exercised over the
person doing the work
Whether he must accept further work
Whether the other party must provide further work
Whether he provides his own equipment
Whether entitled to benefits eg pension
Whether he hires his own helpers
What degree of financial risk he takes
What degree of responsibility for investment
and management he has
Whether he can profit from sound management
Whether he can work when he chooses
The wording used in any agreement between
parties
Workers status also

affects NICs payable
lower rates apply to the
self employed
Context
Employment income and trading income are calculated using different rules. It is therefore
essential to determine whether an individual is employed or self employed.
Key learning points
HMRC look at all the factors to decide whether an individual is employed or self employed.
Do the scales tip more in one direction or the other? It is not a black and white decision but
instead depends on the facts of each individual case.
Most individuals prefer to be treated as a self employed individual rather than an

employee, because both their income tax and their NIC bill will be lower.
The question of whether someone is employed or self-employed is always a topical area and
could appear as a written element of a longer question. It will not be a question of its own.

Jeremy has a 6 month contract with YouKnow Plc providing consultancy services.
He works on their premises from Monday to Friday but provides his own laptop.
He does not receive sickness or holiday pay. Jeremy is paid a monthly amount for his services.
Is Jeremy likely to be treated as an employee of YouKnow Plc or as self employed?
Solution 3.1
Factors pointing towards employment:
Works on clients premises

Paid monthly amount
Factors pointing towards self employment:
Short term contract

Provides own equipment (laptop)
Does not receive sickness or holiday pay
Conclusion: Jeremy is likely to be treated as self employed
Web
http://www.hmrc.gov.uk/employment-status/index.htm
3: Employment income
25
BASIS OF ASSESSMENT
Need to calculate the cash

equivalent of any noncash benefits (see later)
Employment and
self-employment
Basis
of assessment
Allowable
deductions
Employment income
Employees/directors are taxed on income from
the employment:
cash earnings
benefits
Earnings are taxed in the year in which they are

received.
The general definition of the date of receipt is
the earlier of:
the time payment is made
the time entitlement to payment arises
Receipts basis ie
received in the tax
year (ie 6 April to 5
April)
26
Earnings include salary,

wages, tips broadly
anything received as a
reward for employment
Directors are deemed to receive earnings on the earliest

of the following:
the time given by the above general rule
the time the amount is credited in the companys
accounting records
the end of the companys period of account (if the
amount has been determined by then)
when the amount is determined, if this after the end
of the companys period of account
Special rules for

directors
Context
We must determine exactly when earnings are received so that we only tax earnings received in
the tax year.
Key learning points
Only tax earnings received in the tax year.
Watch for dates in the question if the earnings are not received in the relevant tax year do
not include them.
Earnings include both cash (eg salary/tips) and non-cash benefits (see the next chapter).
Topic tip
Earnings tested as part of Question 1 in the December 2008, June 2009, December
2009, December 2010 and June 2011 exams.
In the exam could be asked to calculate the employment income figure and then slot it into
the correct place in the income tax computation.
Could look back now to remind themselves where it goes?

Stephanie receives an annual salary of 32,000.
Stephanie has the use of a company car. Her employers payroll department has advised her that
the cash equivalent of the company car benefit is 1,275.
She also received the following performance related bonuses:
15
15
15
15
July 2010
January 2011
July 2011
January 2012
5,500
2,800
6,200
850
What are her earnings for 2011/12?
Solution 3.2
Earnings:
Salary
Car benefit
Bonus received in 2011/12:
15.7.11
15.1.12
Total
32,000
1,275
6,200
850
40,325
27
ALLOWABLE DEDUCTIONS
Expenses of travelling
from home to a client
are only deductible if the
journey is substantially
different from normal
commute
Employment and
self-employment
The general rule is that expenses can only be deducted from

earnings if they are incurred wholly, exclusively and necessarily
in performing the duties of the employment.
Expenses specifically deductible against earnings:
1
Insurance premiums to cover directors and employees
liabilities (and payments to meet those liabilities)
2
Subscriptions to relevant professional bodies
3
Qualifying travel expenses costs the employee incurs
travelling in the performance of his duties or/and travelling
to or from a place attended in the performance of duties
4
Contributions (within limits) to a registered occupational
pension scheme
5
Payments to charity under a payroll deduction
scheme
Both pension
contributions and
charitable giving
payments are
deducted by the
employer from pretax salary
28
It is extremely difficult to
deduct expenses from
employment income
Learn the terminology

(wholly, exclusively and
necessarily)
Basis
of assessment
Allowable
deductions
The strictness of this test has been

emphasised in many cases
Normal commuting does not qualify

Relief is available for expenses incurred by an
employee working at a temporary location on
a secondment of 24 months or less
If a mileage allowance is paid relief is
available for any shortfall of allowance actually
paid over statutory mileage allowance
Exam focus
If you have to decide whether an expense
is deductible, put yourself in HMRCs
position and try to find an argument
against deducting it. If you can find a
specific argument, the expense is probably
not deductible.
Mileage allowance for use of OWN car:

Up to 10,000 business miles: @ 45p per mile
Miles over 10,000:
@ 25p per mile
Taxable if paid over these rates (in tax rates
and allowances)
Context
Employees can only deduct expenses in very limited circumstances, which is one of the reasons why
individuals prefer to be treated as self employed where possible. Where a deduction is possible, the
employees employment income figure in the tax computation is reduced.
Topic tip
Must understand how limited the opportunities are for an employee to obtain a deduction for
their expenses.
Case names are given in the Study Text these do not need to be learnt.
Distinguish between company cars (taxable benefit next chapter) and mileage
allowance (use of own car).

Sylvia is employed as a bookkeeper by Grant Ltd. She has the following expenses:
Annual membership dues (International Association of Bookkeepers)
New suit for work
Occupational pension contribution
Commuting costs
Travel to clients
250
180
360
1,500
95
What are the total expenses that can Sylvia deduct from her employment income?
Solution 3.3
Sylvias deductible expenses are:
International Association of Bookkeepers membership dues
Occupational pension contribution
Travel to clients
Total
250
360
95
705
The cost of clothes for work is not deductible (except for certain trades). Commuting costs are
usually not deductible. Other expenses are deductible only if they are incurred wholly, exclusively
and necessarily in performing the duties of the employment.
29
Reinforcement
30
Expand notes on travel expenses (para 3.2), other expenses (para 3.3) and
mileage allowances (section 4)
Attempt Quick Quiz
Work through all the questions in the chapter and then attempt Question 4 in
the exam question bank (27 mins). Although the focus in the exam is on
computational questions, written questions may still come up as part of a
longer question.
chapter 4
TAXABLE BENEFITS
EXEMPT BENEFITS
THE PAYE SYSTEM
Benefits are often examined so it is vital that you are

able to calculate the taxable value of benefits provided
to employees. You also need to be aware of the
benefits that are exempt from tax.
The deduction of tax from employment income through
the PAYE system is less frequently examined, but it is
still important.
TAXABLE AND
EXEMPT BENEFITS.
THE PAYE SYSTEM
31
TAXABLE BENEFITS
Include value of any expenses

reimbursed to P11D employees
then deduct the amount incurred
wholly, exclusively & necessarily.
A P11D is the form the

employer uses to report the
benefits to HMRC
So, if an employee pays 100 of

business expenses which his
employer then reimburses, include
the 100 in employment income
then show it as a deduction.
Taxable
benefits
Exempt
benefits
The PAYE
system
Non-cash benefits
Taxed on most employees
Except excluded employees (earn less

than 8,500 p.a. and not director) only
taxable on certain benefits
P11D employees are employees who are
not excluded employees.
Meal vouchers exempt
up to 15p per day
General business expenses
Vouchers
Reimbursed expenses taxable on

employees (not excluded employees).
May make deduction claim.
Cash vouchers
Credit token
Non-cash vouchers
Taxable on all employees (cost of providing benefit)
including excluded employees.
Job related:
Necessary
Customary
Security
Vouchers and accommodation

are taxable on both
excluded and P11D
employees
32
Living expenses are not

taxable on excluded
employees
Context
Whenever an employer provides something other than cash to an employee you need to think
about whether there is a taxable benefit. While P11D employees are taxable on any benefit they
receive, apart from certain exempt benefits (see next section), excluded employees are
generally only taxable on vouchers (which include credit cards) and living accommodation provided
by their employer.
Key learning points
Must distinguish between P11D and excluded (ie earnings < 8,500) employees.
Vouchers: The 15p exempt meal vouchers (sometimes called luncheon vouchers) are an
example of an exempt benefit (covered in the next section). Do not ignore exempt benefits
in the exam tell the examiner they are exempt: this may earn a mark!
Accommodation benefit: Did the property cost (including improvements before start of
current tax year) more than 75,000? If so will need to calculate two elements of the
accommodation benefit: the basic and additional benefit.
Topic tip
Employment benefits were tested in Question 1 of the December 2010 exam.
Official rate of interest (for additional accommodation benefit) is given in the exam in the
tax tables.
Students often miss the point that if an employee pays rent to the employer for living
accommodation this rent reduces the taxable benefit.
Check dates given in the question: time apportionment is crucial if the benefit has only been
available for part of the tax year.

Harvey is provided with a house by his employer, who had acquired the house at a cost of 130,000
on 1 April 2005 and spent 10,000 on extending the property on 1 September 2008. Harvey moved
into the property on 1 July 2008.
The annual value of the house for 2011/12 is 3,250. Harvey pays rent of 300 each month to his
employer for the use of the house.
What is Harveys total benefit in respect of the house for 2011/12?
Solution 4.1
Basic charge:
Annual value
Less: contribution (rent)
3,250
(3,250)
Nil
Additional charge:
Cost + improvements before 6.4.11 (130,000 + 10,000)
Less: limit
65,000 @ 4%
Less: rest of rent: (300 12) - 3,250
Taxable benefit
140,000
(75,000)
65,000
2,600
(350)
2,250
4: Taxable and exempt benefits. The PAYE system
33
TAXABLE BENEFITS
Compare the average

and strict methods of
calculating the loan
The provision of a
pool car (ie a car
available to all
employees on an
occasional basis) is an
exempt benefit
The fuel benefit is an all or

nothing benefit, ie either
taxable in full or not at all (if
all private fuel is
reimbursed to the employer)
Taxable
benefits
Loans
1
Loans of over 5,000 give

rise to taxable benefits equal
to the difference between the
actual interest and interest at
the official rate.
2 A write-off of a loan gives rise
to a taxable benefit equal to
the amount written off.
Only taxed on
P11D employees
Exempt
benefits
The PAYE
system
Cars
Annual taxable benefit for the private use of a car is (price of car
capital contributions) %.
Cars emitting 75g/km or less = 5%

Cars emitting CO2 between 76120g/km = 10%.
Cars emitting between 121125g/km = 15%. Percentage
increases by 1% for each 5g/km (rounded down) up to 35%.
Percentage increased by 3% for diesel engined cars (not
above max 35%).
Benefit scaled down on a time basis, if car not available all
year. Benefit then reduced by any contribution by employee for
private use.
Fuel for private use is charged as percentage of base figure
(18,800, 2011/12). Same percentage as car benefit. No
reduction for partial reimbursement by the employee.
Private use of asset
If the asset is subsequently given

to the employee the taxable
benefit is the higher of:
(i) original MV less amounts
already taxed
(ii) market value at date of gift
less any employee contribution.
In general, if an asset is made available for private use, the

annual taxable benefit is 20% of the market value when the
asset was first provided, less any employee contribution.
Other benefits
Not used if asset is bicycle
Taxable value of other benefits charged on

employees other than excluded employees
Excluded employees taxed only on second-hand
value as cash earnings
Only includes any additional

(or marginal) cost for the
employer, eg private school
fees for member of staffs
child will only be the
additional cost for that child
(eg school dinners, etc...)
34
Cost of provision of benefit less any

amount made good by employee
If no second hand
value, no benefit!
Only a taxable benefit

for P11D employees
Context
The general rule is that the value of the benefit to include in the employees employment income is
the cost to the employer (or second hand value for excluded employees). However, there are
specific rules for certain assets, which, of course, are the most examinable!
Key learning points
All benefits must be time apportioned if they are only available for part of the tax year.
In general, any contributions by an employee can be deducted from the taxable benefit
figure.
One exception to this rule is in relation to private fuel.
Topic tip
Steps to follow where there is both time apportionment and an employee contribution:
(1)
(2)
(3)
Calculate the full benefit using rules learnt

Time apportion (Note. Special 30 day rule for cars)
Deduct employee contribution
Must be able to calculate taxable benefits quickly and correctly in the exam and feed them
into the income tax computation as part of the total employment income figure.
Benefits will usually be examined in an employment income question. They were tested as
part of Question 1 in both the June 2009 and December 2010 exams.

Keith has a company car (list price 25,000) throughout the tax year. The car has CO2 emissions of
188g/km. His employer pays for all of his private diesel.
What is Keiths total taxable benefit?
Solution 4.2
Car benefit:
185 125 + 15 + 3 (diesel)= 30%

5
25,000 30%
7,500
Fuel benefit:
18,800 30%
Total benefit
5,640
13,140

This example appears in the Question & Answer Bank at the back of these Notes.
Solution 4.3
This solution appears in the Question & Answer Bank at the back of these Notes.
35
EXEMPT BENEFITS
You must learn to spot

exempt benefits and tell
the examiner when you
do for an easy mark
Taxable
benefits
Exempt
benefits
The PAYE
system
Exempt benefits
Loans of up to 5,000
Meal vouchers of up to 15p per day
Entertainment and gifts provided by a third party for an employee
by reason of his employment
Long service awards of up to 50 per year of service
Job related accommodation
Workplace nurseries
Other childcare provided by employer
Recreational/sporting facilities available to employees generally
Works buses and mini-buses
Bicycles provided for cycling to work
Parking places at or near work
The cost of gifts from any one source

must not exceed 250 per tax year
The award must be a non-cash award and
the employee must have worked at least
20 years
Limited to 55/28/22 per week for
basic/higher/additional rate employee
A minibus must have a seating capacity of
9 or more. A works bus must have a
seating capacity of 12 or more
Personal incidental expenses

(PIEs):
UK
Overseas
5 per night
10 per night
If exceeds these limits, the

whole amount is taxable
36
Can claim more than 3

per week (tax free) with
supporting evidence
Context
Employers can provide certain benefits to their employees with no tax (or NIC) consequences
for the employee. These are clearly a valuable part of an employees remuneration package.
Key learning points
The examiner often puts an exempt benefit in an employment income question. Do not miss
the easy mark for spotting it and telling the examiner
There is no easy way to spot an exempt benefit simply have to learn them!

Which of the following are exempt benefits?
(a)
(b)
(c)
(d)
(e)
Mileage allowance paid at 55p per business mile

Staff party cost 50 per head
Car parking space at work
5,000 removal expenses
Private medical insurance
Solution 4.4
(a)
The first 45p of the mileage allowance is exempt. 10p per business mile is a taxable benefit
(b)
Staff party is exempt so long as below 150 per head
(c)
Car parking space at work is exempt
(d)
Removal expenses are exempt up to 8,000
(e)
Private medical insurance is only an exempt benefit if it is paid in respect of an employee

who is working abroad.
37
THE PAYE SYSTEM
PAYE is not a separate tax

it is simply the system
used to collect the correct
amount of tax (and NIC)
from an employees pay.
Cash payments
Shares
Other traded assets (eg
gold, coffee, etc...)
The value of taxable

benefits can be included in
an employees PAYE code
so that the PAYE system is
effectively used to collect
tax on those benefits
Taxable
benefits
Exempt
benefits
The PAYE
system
The PAYE system collects tax from employees each payday, with the intention that over a tax year, the correct
total of tax due will be collected.
Routine each payday

Add the gross pay to the running total of gross
pay for the tax year
Use the employees PAYE code to work out the
amount of cumulative gross pay which is tax free
Compute tax on the balance
Deduct the tax already paid. The difference is the
tax to deduct on this payday
Payment
The employer must pay over the tax deducted up
to the 5th of each month by the 19th of the month.
Quarterly payment is allowed if the average
monthly total of tax and NICs is less than 1,500
P14
Tax (and NIC) figures for each

individual employee
P35
Summary of above figures for all

employees
P11D Benefits and expenses for each

individual employee
38
Tax is collected via PAYE on
PAYE code numbers

L:
P:
Y:
Code with basic personal allowance

Code with age 65-74 allowances
Code with age 75+ allowance
PAYE settlement agreements

PAYE settlement agreements are arrangements under
which employers settle employees income tax liabilities
on certain benefits and expense payments.
Year end returns

Following the year end the employer must submit:
Form P14
Form P35 } By 19 May
Form P11D/P9D by 6 July
PSAs can be used

where the expense or
benefit is minor or
irregular or where it
would be impractical to
operate PAYE

Tutor Notes: ACCA Paper F6

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Tutor Notes: ACCA Paper F6

Hochgeladen von

Copyright:

Verfügbare Formate

Tutor

First edition 2009

British Library Cataloguing-in-Publication Data

All our rights reserved. No part of this

BPP Learning Media Ltd

So what are the benefits of our Tutor Notes?

Teaching session planners

So what are the benefits of our Tutor

Benefit 2: Flexibility, so you can add value as you

Benefit 3: The right format

Benefit 4: Unique integration

How do I use the Tutor Notes?

One set of notes for you, one for your students

Heres what we recommend you do.

Teaching the topic

Displaying the Passcard graphics

Other technologies that can be used to display the Notes include:

Using the Learning Examples in the Student Notes

It might be generally understood and you wont need to intervene.

Explaining their thinking to other students helps them to develop effective

Teaching session planners

A condensed three day course (so 12 sessions)

A full-length six-day course (so 24 sessions)

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

22.1 and 23.3

Study text question bank

24.1 and 25.2

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

12.1 and 12.2

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

Study text question bank

22.1 and 22.2

Study text question bank

23.1 and 23.2

Study text question bank

Study text question bank

25.1 and 25.2

Study text question bank