01
finance act
This article looks at the changes made by the Finance Act 2009, and should be
read by students who are taking Papers F6 (UK) or P6 (UK), or CAT Paper 9 (UK)
at either the June or December 2010 sittings.
technical
RELEVANT to ACCA Qualification Paper F6 (UK) and Paper P6 (UK)
This article looks at the changes made by the
Finance Act 2009, and should be read by students
who are taking Papers F6 (UK) or P6 (UK), or CAT
Paper 9 (UK) at either the June or December 2010
sittings. The aim of the article is to summarise the
changes made by the Finance Act 2009 and to look
at the more important changes in greater detail.
The article also includes details of legislation that
was enacted prior to the Finance Act 2009, but has
only come into effect from 6 April 2009.
Please note that if you are sitting Papers F6 (UK)
or P6 (UK), or CAT Paper 9 (UK) in December 2009,
you will be examined on the Finance Act 2008,
which is the legislation as it relates to the tax year
2008–09. Therefore this article is not relevant to
you, and you should instead refer to the Finance
Act 2008 article published on the ACCA website at
www.accaglobal.com/pubs/students/publications/
student_accountant/archive/sa_jj08_financeact.pdf
Paper F6 (UK)
INCOME TAX
Rates of income tax
The rates for the tax year 2009–10 are as follows:
Basic rate £1 to £37,400 20%
Higher rate £37,401 and above 40%
A starting rate of 10% applies to savings income
where it falls within the first £2,440 of taxable
income. If non-savings income exceeds £2,440 the
starting rate of 10% for savings does not apply. In
this case savings income is taxed at the basic rate
of 20% if it falls below the higher rate threshold
of £37,400, and at the higher rate of 40% if it
exceeds the threshold.
Dividends are taxed at the lower rate of 10%
if they fall below the higher rate threshold of
£37,400, and at the higher rate of 32.5% where
they exceed the threshold.
Personal allowances
Personal allowances for the tax year 2009–10 are
as follows:
Personal allowance Standard £6,475
Personal allowance 65–74 £9,490
Personal allowance 75 and over £9,640
Income limit for age-related allowances £22,900
Example 1
For the tax year 2009–10 Ingrid, aged 40, has a
salary of £37,000, building society interest of £800
(net) and dividends of £9,000 (net). Her income tax
liability is as follows:
£
Employment income 37,000
Building society interest (800 x 100/80) 1,000
Dividends (9,000 x 100/90) 10,000
10,000
48,000
Personal allowance (6,475)
10,000
Taxable income 41,525
10,000
Income tax: 31,525 at 20% 6,305
5,875 at 10% 587
4,125 at 32.5% 1,341
10,000
Tax liability 8,233
10,000
¤ The starting rate of 10% for savings income is
not applicable because the non-savings income
(37,000 - 6,475 = £30,525) exceeds £2,440.
 student accountant 09/2009
02
Relevant to those students taking exams in the June or December 2010 sittings

2009
AND CAT Paper 9 (UK)

Example 2 ¤ Lorn’s total income exceeds £22,900, so her

the Finance Act 2008, which is the legislation as it relates to the

For the tax year 2009–10, Ali, aged 67, has personal allowance of £9,640 is reduced to
pensions of £10,800 and bank interest of £4,000 £8,090 (9,640 - 1,550 (26,000 - 22,900 =
(net). Her income tax liability is as follows: 3,100/2)).
Please note that if you are sitting Papers F6 (UK) or P6 (UK), or

£ ¤ The starting rate of 10% for savings income is

Pensions 10,800 not available because the non-savings income
Bank interest (4,000 x 100/80) 5,000 (22,000 - 8,090 = £13,910) exceeds £2,440.
CAT Paper 9 (UK) in December 2009, you will be examined on

10,000
15,800
Personal allowance (9,490)
10,000
Taxable income 6,310
10,000
Income tax: 1,310 at 20% 262
1,130 at 10% 113
3,870 at 20% 774
10,000
Tax liability 1,149
10,000
¤ Non-savings income is £1,310 (10,800 - 9,490),
so £1,130 (2,440 - 1,310) of the savings
income is taxed at the starting rate of 10%. The
remainder of the savings income is taxed at the
basic rate of  20%.
Example 3
For the tax year 2009–10 Lorn, aged 80, has
pensions of £22,000 and building society interest
of £3,200 (net). Her income tax liability is
as follows: of 10% applies to motor cars with a CO2 emission
£ rate of exactly 120g per kilometre or less. This
Pensions 22,000
Building society interest (3,200 x 100/80) 4,000
tax year 2008–09.
Individual Savings Accounts (ISAs)
For the tax year 2009–10 individuals aged 50
and over can invest up to £5,100 in a cash
ISA, and up to £10,200 in a stocks and shares
ISA. This is subject to an overall investment limit
of £10,200. Therefore, if £5,100 is invested in
a cash ISA only £5,100 can be invested in a stocks
and shares ISA.
For individuals aged under 50 the investment
limits for the tax year 2009–10 are unchanged. The
overall investment limit is £7,200, of which £3,600
can be invested in a cash ISA.
The income from ISAs is exempt from income
tax, while a capital gain made within a stocks and
shares ISA is exempt from capital gains tax.
Employment income
Company car benefit
For the tax year 2009–10 the base level of CO2
emissions used to calculate company car benefits is
unchanged at 135g per kilometre.
The percentage used to calculate a car benefit
ranges from 15% to 35%. However, a lower rate
lower rate is increased to 13% (10% + 3%) for
diesel cars.

10,000
26,000 Example 4
Personal allowance (8,090) During the tax year 2009–10 Fashionable plc
10,000 provided the following employees with company
Taxable income 17,910 motor cars:
10,000
Income tax: 17,910 at 20% 3,582 Amanda was provided with a new diesel powered
10,000 company car on 6 August 2009. The motor car has
Tax liability 3,582 a list price of £13,500 and an official CO2 emission
10,000 rate of 122g per kilometre.
03 technical
Betty was provided with a new petrol-powered
company car throughout the tax year 2009–10. The
motor car has a list price of £16,400 and an official
CO2 emission rate of 193g per kilometre.
Charles was provided with a new petrol-powered
company car throughout the tax year 2009–10. The
motor car has a list price of £22,600 and an official
CO2 emission rate of 254g per kilometre. Charles
paid Fashionable plc £1,200 during the tax year
2009–10 for the use of the motor car.
Diana was provided with a new petrol-powered
company car throughout the tax year 2009–10. The
motor car has a list price of £12,400 and an official
CO2 emission rate of 118g per kilometre.
Amanda
The CO2 emissions are below the base level figure
of 135g per kilometre, so the relevant percentage is
18% (15% plus a 3% charge for a diesel car). The
motor car was only available for eight months of the
tax year 2009–10, so the benefit is £1,620 (13,500
x 18% x 8/12).
Betty
The CO2 emissions are above the base level figure
of 135g per kilometre. The CO2 emissions figure of
193 is rounded down to 190 so that it is divisible by
five. The minimum percentage of 15% is increased
in 1% steps for each 5g per kilometre above the
base level, so the relevant percentage is 26% (15%
+ 11% (190 - 135 = 55/5)). The motor car was
available throughout the tax year 2009–10 so the
benefit is £4,264 (16,400 x 26%).
Charles
The CO2 emissions are above the base level figure
of 135g per kilometre. The relevant percentage is
38% (15% + 23% (250 - 135 = 115/5)), but this
is restricted to the maximum of 35%. The motor
car was available throughout the tax year 2009–10
so the benefit is £6,710 (22,600 x 35% = 7,910 -
1,200). The contributions by Charles towards the
use of the motor car reduce the benefit.
expenditure on motor cars. There is no longer any restriction to the amount
of writing-down allowance that can be claimed in respect of an expensive
changes apply from 6 April 2009 in allowances available in respect of
Diana
The CO2 emissions are below 120g per kilometre, so
the lower rate of 10% applies. The motor car was
available throughout the tax year 2009–10, so the
benefit is £1,240 (12,400 x 10%).
Company car fuel benefit
The fuel benefit is calculated as a percentage of
a base figure that is announced each year. For the
motor car. Previously, there was a £3,000 restriction.
tax year 2009–10 the base figure is unchanged at
£16,900.
The percentage used in the calculation is exactly
the same as that used for calculating the related
company car benefit.
Example 5
Continuing with Example 4.
Amanda was provided with fuel for private use
between 6 August 2009 and 5 April 2010.
Betty was provided with fuel for private use between
6 April 2009 and 31 December 2009.
Charles was provided with fuel for private use
between 6 April 2009 and 5 April 2010. He paid
Fashionable plc £600 during the tax year 2009–10
towards the cost of private fuel, although the actual
cost of this fuel was £1,000.
Diana was not provided with fuel for private use.
Amanda
The motor car was only available for eight months
of the tax year 2009–10, so the fuel benefit is
£2,028 (16,900 x 18% x 8/12).
Betty
Fuel was only available for nine months of the tax
year 2009–10, so the fuel benefit is £3,295 (16,900
x 26% x 9/12).
Charles
The motor car was available throughout the tax
year 2009–10 so the benefit is £5,915 (16,900 x
 student accountant 09/2009
04

writing-down allowances at the rate of 20% are included in the general pool.
motor cars qualifying for a 10% allowance are included in a special rate pool.
The rate of writing-down allowance for a motor car now depends on its
co2 emissions. unless there is private use, motor cars qualifying for
35%). There is no reduction for the contributions ¤ Motor cars with CO2 emissions of between 111
made, since the cost of private fuel was not and 160g per kilometre qualify for writing‑down
fully reimbursed. allowances at the rate of 20% on the full
purchase price.
Diana ¤ Motor cars with CO2 emissions of more than
Fuel was not provided for private use so there is no 160g per kilometre only qualify for writing-down
fuel benefit. allowances at the rate of 10%.
¤ The 100% first-year allowance continues to be
Official rate of interest available in respect of low emission motor cars
The official rate of interest is used when calculating with CO2 emissions of 110g per kilometre or less.
the taxable benefit arising from a beneficial loan or
from the provision of living accommodation costing Unless there is private use, motor cars qualifying
in excess of £75,000. for writing-down allowances at the rate of 20%
For the June and December 2010 sittings the are included in the general pool, while motor cars
actual official rate of interest of 4.75% for the tax qualifying for writing-down allowances at the rate
year 2009–10 will be used. of 10% are included in the special rate pool. Motor
cars with private use (by a sole trader or partner)
Capital allowances are not pooled, but are kept separate so that the
First-year allowance private use adjustment can be calculated.
For a period of one year only, a first-year allowance The treatment of motor cars already owned at
of 40% has been introduced. The new allowance 6 April 2009 (1 April 2009 for limited companies)
will apply to expenditure during the period 6 April is to remain unchanged for a period of five years.
2009 to 5 April 2010 (1 April 2009 to 31 March Therefore no adjustment is necessary for any motor
2010 for limited companies). cars already included in the general pool. Motor
The annual investment allowance already cars costing more than £12,000 or those with
provides a first-year allowance of 100% for the first private use will continue to be kept separately, and
£50,000 of expenditure on plant and machinery, will qualify for writing-down allowances at the rate
so the first-year allowance of 40% is only relevant of 20% restricted to a maximum of £3,000. This is
where expenditure exceeds £50,000. The first year regardless of a motor car’s CO2 emissions.
allowance of 40% is not available for expenditure Although the treatment of motor cars already
on motor cars or on expenditure that is included in owned at 6 April 2009 (1 April 2009 for companies)
the 10% special rate pool. is examinable, a question will not be set involving
the purchase of a motor prior to this date.
Motor cars The new capital allowance rules specifically
There have been a number of changes as regards exclude motorcycles, and expenditure on
the allowances available in respect of expenditure these therefore qualifies for the annual
on motor cars. investment allowance.
The changes apply from 6 April 2009 (1 April The capital allowances information that will be
2009 for limited companies). given in the tax rates and allowances section of
There is no longer any restriction to the amount the exam paper for the June and December 2010
of writing-down allowance that can be claimed sittings is as follows:
in respect of an expensive motor car. Previously,
there was a £3,000 restriction. Instead, the rate
of writing-down allowance for a motor car now
depends on its CO2 emissions:
05 technical

Capital allowances for industrial buildings are being phased out. This is being
achieved by an annual 25% reduction in the amount of allowance available
Rate of allowance Motor car (1) purchased on 8 June 2009 for
% £28,300 has CO2 emissions of 140g per kilometre.
Plant and machinery Motor car (2) purchased on 2 August 2009 for
General pool – first-year allowance 40 £11,600 has CO2 emissions of 155g per kilometre.
writing-down allowance 20 This motor car is used by Ming, and 15% of the
Special rate pool 10 mileage is for private journeys. Motor car (3)
(The first-year allowance of 40% applies to purchased on 19 October 2009 for £16,800 has
expenditure during the period 6 April 2009 to 5 CO2 emissions of 105g per kilometre. Motor car (4)
April 2010 (1 April 2009 to 31 March 2010 for purchased on 4 November 2009 for £10,100 has
limited companies).) CO2 emissions of 185g per kilometre.
Motor cars Table 2 on page 14 shows Ming’s capital
CO2 emissions up to 110g per kilometre 100 allowance claim for the year ended 5 April 2010.
CO2 emissions between 111 and 160g
per kilometre 20 Industrial buildings allowances
CO2 emissions over 160g per kilometre 10 Capital allowances for industrial buildings are being
phased out. This is being achieved by an annual
Annual investment allowance 25% reduction in the amount of allowance available
First £50,000 of expenditure 100 over a four-year period. For the tax year 2009–10
(the financial year 2009 for limited companies)
Previously, you were told when a motor car was low the writing-down allowance is therefore reduced
emission. From the June 2010 sitting onwards you from 3% to 2% where a new industrial building is
will only be given a motor car’s CO2 emissions. acquired or where an existing industrial building
continues to be owned.
Example 6 Where a limited company’s chargeable period
Ming prepares accounts to 5 April. On 6 April 2009 falls into two financial years then apportionment
the tax written down values of plant and machinery will be necessary in order to determine the rate of
were as follows: writing-down allowance applicable. A question will
£ not be set involving apportionment.
General pool 16,700
over a four-year period.

Expensive motor car 18,800 Example 7

Scuba Ltd makes up its accounts to 31 March. The
The following transactions took place during the company purchased a new factory from a builder
year ended 5 April 2010: on 1 July 2009 for £240,000 (excluding the
Cost/ cost of land), and this was immediately brought
(Proceeds) into use.
£
12 May 2009 Purchased equipment 61,400
8 June 2009 Purchased motor car (1) 28,300
2 August 2009 Purchased motor car (2) 11,600
19 October 2009 Purchased motor car (3) 16,800
4 November 2009 Purchased motor car (4) 10,100
2 April 2010 Sold motor car (4) (8,300)
 student accountant 09/2009
Although tax relief is available on pension contributions up to the amount of
The annual allowance for the tax year 2009–10 has been increased to £245,000.
earnings for a particular tax year, the annual allowance acts as an effective
For the year ended 31 March 2010 Scuba Ltd can
claim a writing-down allowance of £4,800 (240,000
at 2%).
Leased motor cars
There has been a change in the treatment of the
cost of leasing a motor car. Previously, when
calculating taxable profits a proportion of the lease
cost was disallowed if the retail price of a leased
motor car was more than £12,000.
There is now no adjustment where the CO2
emissions of a leased motor car do not exceed
160g per kilometre, regardless of the retail
price. Where CO2 emissions are more than 160g
per kilometre then 15% of the leasing costs are
disallowed in calculating taxable profits.
Example 8
Fabio Ltd makes up its accounts to 31 March. On
1 April 2009 the company commenced the lease of
two motor cars. The first motor has CO2 emissions
of 145g per kilometre and was leased at a cost
of £4,800 during the year ended 31 March 2010.
The second motor has CO2 emissions of 180g
per kilometre and was leased at a cost of £6,000
during the year ended 31 March 2010.
When calculating its taxable profits for the
year ended 31 March 2010 Fabio Ltd will have to
disallow leasing costs of £900 (6,000 x 15%).
Loss relief
An additional loss relief has been introduced that
allows a trading loss to be set against trading
profits of the three tax years prior to the tax year
2009–10. The relief is in addition to a claim (under
s.64 ITA 2007) against total income of the tax year
2009–10 and/or the tax year 2008–09.
annual limit.
Where the additional loss relief is claimed
against trading profits of the tax years 2006–07
and 2007–08 then relief is restricted to a maximum
of £50,000. There is no restriction where relief
is claimed against trading profits of the tax year
2008–09 instead of making a claim against total
profits for that year. The additional relief is claimed
against the most recent years first.
06
A taxpayer making a trading loss in the tax year
2009–10 therefore has the following options if they
want to claim relief:
¤ Make a claim against total income of the tax
years 2009–10 and 2008–09, and then claim
additional relief against trading profits of the tax
years 2007–08 and 2006–07.
¤ Make a claim against total income of the tax
year 2009–10, and then claim additional relief
against trading profits of the tax years 2008–09,
2007–08 and 2006–07.
¤ Make a claim against total income of the tax year
2008–09, and then claim additional relief against
trading profits of the tax years 2007–08 and
2006–07.
Although additional loss relief is also available
in respect of a trading loss made in the tax year
2008–09, any question involving additional tax
relief will be confined to the tax year 2009–10.
Example 9
Table 1 on page 13 shows Samantha’s
gross income.
Pension schemes
Annual allowance
The annual allowance for the tax year 2009–10 has
been increased to £245,000. Although tax relief is
available on pension contributions up to the amount
of earnings for a particular tax year, the annual
allowance acts as an effective annual limit. Any
tax relieved contributions in excess of the annual
allowance are taxed at the rate of 40%, thus
cancelling out the tax relief that will have been given.
07 technical

£1,750,000.The lifetime allowance applies to the total funds that can be built
The lifetime allowance for the tax year 2009–10 has been increased to
Lifetime allowance £
The lifetime allowance for the tax year 2009–10 has Trading profit 360,000
been increased to £1,750,000. Personal allowance (6,475)
The lifetime allowance applies to the total funds 353,525
that can be built up within a person’s pension Taxable income 353,525
schemes. Where the limit is exceeded there will 353,525
be an additional tax charge when that person
subsequently withdraws the funds in the form of Income tax: 297,400 at 20% 59,480
a pension. 56,125 at 40% 22,450
353,525
Anti-forestalling provisions 81,930
The government has announced that from 6 April Excess contribution charge
2011 tax relief for pension contributions made 15,000 (260,000 - 245,000)
by high income taxpayers is to be restricted. To at 40% 6,000
prevent such taxpayers making excessive pension 353,525
contributions prior to the change coming into effect, Tax liability 87,930
anti-forestalling provisions have been introduced. 353,525
For high-income taxpayers these provisions restrict
tax relief where excessive pension contributions CORPORATION TAX
up within a person’s pension schemes.

are made. The anti-forestalling provisions are not Rates of corporation tax
examinable, and you should therefore assume in The small company rate of corporation tax and
any exam question involving pension contributions the full rate of corporation tax for the financial
that the contributions are not excessive. year 2009 are unchanged at 21% and 28%, as are
the lower and upper limits. The corporation tax
Example 10 rates for the financial year 2009 can therefore be
For the tax year 2009–10 Frank had trading profits summarised as follows:
of £360,000 and made gross personal pension
contributions of £260,000. Level of profits Effective rate
Frank has earnings of £360,000 for the tax year Up to £300,000 21%
2009–10. All of the contributions of £260,000 £300,001 to £1,500,000 29.75%
therefore qualify for tax relief, and he will have paid Over £1,500,000 28%
£208,000 (260,000 less 20%) to the personal
pension company. Higher rate tax relief will be The corporation tax information that will be given
given by extending Frank’s basic rate tax band in the tax rates and allowances section of the exam
for the tax year 2009–10 to £297,400 (37,400 + paper for the June and December 2010 sittings is
260,000). However, there will be a tax charge at the as follows:
rate of 40% on the excess of contributions above
the annual allowance of £245,000. His income tax
liability for the tax year 2009–10 is as follows:

 student accountant 09/2009
08

The latest section of legislation to be rewritten covers the basic provisions

of the charge to corporation tax. This new rewritten legislation has been
The government is in the process of rewriting tax law into plain English.
Financial year 2007 2008 2009 Although the new legislation does not in any way
Small companies rate 20% 21% 21% change existing legislation, it has introduced new
Full rate 30% 28% 28% plain English terminology. Since this terminology
is already in use for Paper F6 (UK) no changes
Lower limit 300,000 300,000 300,000 are necessary.
Upper limit 1,500,000 1
,500,000 1
,500,000
Loss relief
Marginal relief A trading loss can normally be carried back and
fraction 1/40 7/400 7/400 set against profits of the preceding 12 months. For
loss-making accounting periods ending between 24
Example 11 November 2008 and 23 November 2010 this relief
For the year ended 31 March 2010 Easy Ltd has is extended to 36 months.
profits chargeable to corporation tax of £40,000 The extended relief is exactly the same as that
and FII of £10,000. given for terminal losses, with one important
For the year ended 31 March 2010 Difficult difference in that the extended loss relief is
Ltd has profits chargeable to corporation tax of restricted to a maximum of £50,000. The £50,000
published as the Corporation Tax Act 2009.

£600,000 and FII of £50,000. limit is apportioned if a loss-making period

is shorter than 12 months. For example, for a
Easy Ltd nine‑month loss-making period the extended relief
Corporation tax is £8,400 (40,000 at 21%) as the is restricted to a maximum of £37,500 (50,000
profits of £50,000 (40,000 + 10,000) are less x 9/12). The £50,000 restriction only applies to
than £300,000. losses carried back outside the normal 12-month
carry back period.
Difficult Ltd As with relief for terminal losses, where extended
Marginal relief applies as the profits of £650,000 relief is claimed losses are carried back in order,
(600,000 + 50,000) are between £300,000 and most recent periods first.
£1,500,000. The company’s corporation tax liability The following information will be given in the tax
is as follows: rates and allowances section of the exam paper for
£ the June and December 2010 sittings:
600,000 at 28% 168,000
Marginal relief Extended loss relief
7/400 (1,500,000 - 650,000) x 600,000/ Extended loss relief is capped at a maximum of
650,000 (13,731) £50,000. For limited companies it applies to
353,525 loss‑making accounting periods ending between
Liability 154,269 24 November 2008 and 23 November 2010.
353,525
Example 12
Corporation Tax Act 2009 Table 3 on page 15 shows Loser Ltd’s results.
The government is in the process of rewriting
tax law into plain English. The latest section
of legislation to be rewritten covers the basic
provisions of the charge to corporation tax. This
new rewritten legislation has been published as the
Corporation Tax Act 2009.
09 technical
far as Paper F6 is concerned all overseas dividends are now exempt from UK
investment income in the same way as UK dividends, unless they are group income.
There has been a major reform to the treatment of overseas dividends. As
corporation tax. Exempt overseas dividends are included as franked
Overseas dividends
There has been a major reform to the treatment of
overseas dividends. As far as Paper F6 is concerned
all overseas dividends are now exempt from UK
corporation tax.
Exempt overseas dividends are included as franked
investment income in exactly the same way as UK
dividends, unless they are group income. In this case
they are completely ignored for tax purposes.
Although this change in treatment only applies
to overseas dividends received on or after 1 July
2009, a question will not be set where an overseas
dividend is received between 1 April 2009 and
30 June 2009.
Since overseas dividends are now exempt from
UK corporation tax, double taxation relief for
underlying tax is no longer examinable. However,
double taxation relief could still be examined where
there are profits from an overseas branch.
New rules have also been introduced that restrict
the amount of interest that is deductible when
calculating profits chargeable to corporation tax,
but these rules are not examinable.
Example 13
During the year ended 31 March 2010 Various Ltd
received an overseas dividend of £67,500 (net).
Withholding tax was withheld from the dividend at
the rate of 15%.
1 If Various Ltd owns 50% or less of the voting
power of the overseas company, then the overseas
dividend will be exempt from UK corporation tax
but included as franked investment income. The
amount of franked investment income is £75,000
(67,500 x 100/90).
2 If Various Ltd owns more than 50% of the voting
power of the overseas company, then the dividend
will be exempt from UK corporation tax and not
included as franked investment income. This is
because the overseas dividend is group income.
CAPITAL GAINS TAX
Individual exemption limit
The annual exemption limit for the tax year
2009–10 has been increased from £9,600 to
£10,100.
Rate of capital gains tax
For the tax year 2009–10 the rate of capital
gains tax is unchanged at 18%. This rate is used
regardless of the amount of taxable gains or
taxable income. However, on the first £1m of
gains qualifying for entrepreneurs’ relief during a
taxpayer’s lifetime the effective capital gains tax
rate is 10%, since these gains are reduced by a
factor of 4/9ths (18% less 4/9ths = 10%).
Example 14
Michael made the following disposals during the tax
year 2009–10:
¤ On 30 June 2009 Michael sold a business that he
had run as a sole trader since 1 January 2003.
The sale resulted in the following capital gains:
£
Goodwill 260,000
Freehold office building 370,000
Freehold warehouse 170,000
353,525
800,000
353,525
The assets were all owned for more than one year
prior to the date of disposal. The warehouse had
never been used by Michael for business purposes.

¤ On 25 January 2010, Michael sold a 30%
shareholding in Green Ltd, an unquoted trading
company. The disposal resulted in a capital gain
of £450,000. Michael had owned the shares
since 1 March 2004, and was an employee
of the company from that date until the date
of  disposal.
During the tax year 2008–09 Michael made a
disposal against which he claimed £46,000 of
entrepreneurs’ relief.
Michael’s capital gains tax liability for the tax year
2009–10 is as follows:
£ £
Goodwill 260,000
Freehold office building 370,000
353,525
630,000
Entrepreneurs’ relief
(630,000 x 4/9ths) (280,000)
353,525 350,000
Freehold warehouse 170,000
Shareholding in Green Ltd 450,000
Entrepreneurs’ relief
(324,000 x 4/9ths) (144,000)
353,525 306,000
353,525
826,000
Annual exemption (10,100)
353,525 Company motor car 6,400
815,900
353,525
Capital gains tax: 815,900 at 18% 146,862
353,525
¤ Entrepreneurs’ relief of £46,000 was utilised
during the tax year 2008–09, and a further
£630,000 is utilised on the disposal of Michael’s
sole tradership. Therefore, £324,000 (1,000,000 -
46,000 - 630,000) is available when the shares in
Green Ltd are disposed of.
student accountant 09/2009
10
unchanged at 11% and 1%. The rate of 11% is paid on earnings between
£5,715 per year and £43,875 per year, and the rate of 1% is paid on all
NATIONAL INSURANCE CONTRIBUTIONS
Class 1 and Class 1A National Insurance contributions
For the tax year 2009–10, the rates of employee
Class 1 NIC are unchanged at 11% and 1%. The
For the tax year 2009–10 the rates of employee Class 1 NIC are
rate of 11% is paid on earnings between £5,715
per year and £43,875 per year, and the rate of 1%
is paid on all earnings over £43,875 per year.
The rate of employer’s Class 1 NIC is unchanged
at 12.8%, and is paid on all earnings over £5,715
per year.
The rate of Class 1A NIC that employers pay
on taxable benefits provided to employees is also
unchanged at 12.8%.
The Class 1 and Class 1A NIC information that
will be given in the tax rates and allowances section
of the exam paper for the June and December 2010
sittings is as follows:
%
Class 1 Employee £1–£5,715 per year Nil
£5,716–£43,875 per year 11.0
£43,876 and above per year 1.0
Class 1 Employer £1–£5,715 per year Nil
£5,716 and above per year 1
2.8
earnings over £43,875 per year.
Class 1A 12.8
Example 15
Simone Ltd has one employee who is paid £50,000
per year, and was provided with the following
taxable benefits during the tax year 2009–10:
£
Car fuel 5,070
Living accommodation 1,800
11 technical

reduced from 17.5% to 15%. From 1 January 2010 the standard rate will revert
Until 31 December 2009 the standard rate of VAT has been temporarily
The Class 1 and Class 1A NIC liabilities are as follows: VALUE ADDED TAX
£ Registration and deregistration limits
Employee Class 1 NIC The limit of annual turnover above which VAT
43,875 - 5,715 = 38,160 at 11% 4,198 registration is compulsory has been increased from
50,000 - 43,875 = 6,125 at 1% 61 £67,000 to £68,000, and the deregistration limit
4,198 has been increased from £65,000 to £66,000.
4,259
4,198 Standard rate of VAT
Employer’s Class 1 NIC Until 31 December 2009 the standard rate of
50,000 - 5,715 = 44,285 at 12.8% 5,668 VAT has been temporarily reduced from 17.5% to
4,198 15%. From 1 January 2010 the standard rate will
Employer’s Class 1A NIC revert back to 17.5%. Because of this change the
13,270 (6,400 + 5,070 + 1,800) at 12.8% 1 ,699 following additional information will be given under
4,198 the VAT heading in the tax rates and allowances
section of the exam paper for the June and
Class 2 and Class 4 National Insurance contributions December 2010 sittings:
For the tax year 2009–10 the rate of Class 2 NIC
has been increased to £2.40 per week. The rates Standard rate – up to 31 December 2009 15.0%
of Class 4 NIC are unchanged at 8% and 1%. The – from 1 January 2010 onwards 17.5%
rate of 8% is paid on profits between £5,715 and
£43,875, and the rate of 1% is paid on all profits A question will not be set involving a VAT period
over £43,875. The Class 4 NIC information that will that spans 31 December 2009.
be given in the tax rates and allowances section of
the exam paper for the June and December 2010 Example 17
sittings is as follows: Gwen is in the process of completing her VAT return
% for the quarter ended 30 November 2009; the
Class 4 £1–£5,715 per year Nil following information is available:
£5,716–£43,875 per year 8.0 ¤ Sales invoices totaling £128,000 were issued in
£43,876 and above per year 1.0 respect of standard rated sales.
¤ Standard rated purchases of materials amounted
Example 16 to £32,400.
Jimmy is a self-employed builder and Jenny is a ¤ Standard rated expenses amounted to £24,800.
self-employed consultant. Their trading profits for ¤ On 15 November 2009 Gwen purchased
the tax year 2009–10 are respectively £25,000 and machinery at a cost of £24,150. This figure is
£50,000. Class 4 NIC liabilities for the tax year inclusive of VAT.
2009–10 are as follows:
back to 17.5%.
£ Unless stated otherwise all of the above figures are
Jimmy 25,000 - 5,715 = 19,285 at 8% 1,543 exclusive of VAT.
4,198

Jenny 43,875 - 5,715 = 38,160 at 8% 3,053

50,000 - 43,875 = 6,125 at 1% 61
4,198
3,114
4,198

VAT return – quarter ended 30 November 2009
£ £
Output VAT
Sales (128,000 x 15%) 19,200
Input VAT
Materials (32,400 x 15%) 4,860
Expenses (24,800 x 15%) 3,720
Machinery (24,150 x 15/115) 3,150
4,198 (11,730)
4,198
VAT payable 7,470
4,198
TAX MANAGEMENT
Self-assessment payments on account
The de minimis limit for self-assessment payments
on account has been raised to £1,000. Therefore for
the tax year 2009–10, payments on account are not
required if the tax liability for the tax year 2008–09
was less than £1,000 or if more than 80% of the
tax liability for that year was deducted at source.
Penalties for failure to notify a new taxable activity
The single penalty regime that has been introduced
for incorrect returns has been extended to where a
taxpayer fails to notify HM Revenue & Customs of a
new taxable activity, or where the taxpayer is late in
doing so.
The amount of penalty is based on the tax due
but unpaid as a result of the failure to notify,
but the actual penalty payable is linked to the
taxpayer’s behaviour:
¤ There will be no penalty where a taxpayer has a
reasonable excuse for the failure to notify.
¤ There will be a penalty of 30% of the tax unpaid
where there is non-deliberate failure to notify.
¤ There will be a penalty of 70% of the tax
unpaid where there is deliberate failure to notify,
and this is increased to 100% where there is
also concealment.
However, a penalty will be substantially reduced
where a taxpayer makes disclosure, especially when
this is unprompted by HM Revenue & Customs.
student accountant 09/2009
12
Appeals procedure
The single penalty regime that has been introduced for incorrect
Previously, tax appeals by taxpayers were heard by
returns has been extended to where a taxpayer fails to notify
either the General Commissioners or the Special
Commissioners, and VAT appeals were heard by VAT
tribunals. This system has been replaced by a new
HM Revenue & Customs of a new taxable activity, or where
tribunal system. One new feature is that before an
appeal is heard by a tribunal there is now the option
for a taxpayer to request a review of a decision by a
HM Revenue & Customs review officer.
If an appeal does go to a tribunal then a case will
be allocated to one of four tracks depending on the
issues and tax at stake:
¤ The ‘paper’ track will hear the simplest appeals,
such as an appeal against a fixed penalty, and
the case will normally be decided by the tribunal
without a hearing.
¤ The ‘basic’ track will involve a hearing but the
exchange of documents beforehand will be kept
to a minimum.
¤ The ‘standard’ track will involve cases that are
subject to more detailed case management
and formality.
¤ The ‘complex’ track will be for long or complex
cases, or those that involve an important principle
the taxpayer is late in doing so.
or a large financial sum.
The new tribunal system consists of a first-tier
tribunal and an upper tribunal. The first-tier tribunal
will deal with all but the most complex of cases.
The upper tribunal will deal with the more complex
cases, and also hear appeals against the decisions
of the first-tier tribunal.
Information and inspection powers
A new single regime of HM Revenue & Customs’
information and inspection powers has been
introduced. This new regime covers income tax,
capital gains tax, corporation tax, VAT and PAYE.
13 technical
HM Revenue & Customs can request information
from taxpayers by making a written information
notice. Requests to third parties for information
must normally either be agreed by the taxpayer or
approved by the first-tier tribunal.
HM Revenue & Customs also has new powers to
enter and inspect a taxpayer’s business premises in
order to look at business records and assets.
Assessments
The time limits by which HM Revenue & Customs
can make an assessment of income tax, capital
gains tax or corporation tax have been aligned.
The normal time limit is now four years, but this
is increased to six years where tax is lost due to
careless behaviour, and to 20 years where tax is lost
due to deliberate behaviour.
Although the new time limits for making
assessments only apply from 1 April 2010, the old
time limits are not examinable from the June 2010
sitting onwards.
Claims
The general time limit for making claims under
income tax, capital gains tax and corporation tax
has been aligned at four years. An income tax claim
for the tax year 2009–10 must therefore be made by
5 April 2014.
Although the new time limit for making claims
only applies from 1 April 2010, the old time
limits are not examinable from the June 2010
sitting onwards.
Interest on underpaid and overpaid tax
The assumed rates of interest on underpaid
and overpaid income tax, Class 4 NIC, capital
gains tax and corporation tax are based on the
actual rates in force (for income tax purposes) at
6 April 2009.
For the June and December 2010 sittings the
assumed rate of interest on underpaid tax will
therefore be 2.5%. There is no longer any interest
paid in respect of overpaid tax.
David Harrowven is examiner for Paper F6 (UK)
TABLE 1: SAMANTHA’S GROSS INCOME (EXAMPLE 9)
2006–07 2007–08 2008–09 2009–10
£ £ £ £
Trading profit/
(loss) 23,100 31,600 24,200 (84,000)
Property business
profit 3,600 7,100 3,800 5,800
Assuming that the personal allowance for 2009–10 applies
throughout, Samantha’s taxable income will be as follows:
2006–07 2007–08 2008–09 2009–10
£ £ £ £
Trading income 23,100 31,600 24,200 –
Additional loss
relief (18,400) (31,600) – –
(18,400) (18,400) (18,400) (18,400)
4,700 – 24,200 –
Property business
profit 3,600 7,100 3,800 5,800
(18,400) (18,400) (18,400) (18,400)
8,300 7,100 28,000 5,800
Loss relief
(s.64 ITA 2007) – – (28,000) –
18,400) (18,400) (18,400) (18,400)
8,300 7,100 – 5,800
Personal allowance (6,475) (6,475) – (5,800)
18,400) (18,400) (18,400) (18,400)
Taxable income 1,825 625 – –
18,400) (18,400) (18,400) (18,400)
TABLE 1 NOTES
¤ A loss relief claim against total income (under s.64 ITA 2007) for
2009–10 would waste Samantha’s personal allowance for that year.
¤ The additional loss relief claims for 2006–07 and 2007–08 are
restricted to a total of £50,000 (31,600 + 18,400).
¤ The balance of the trading loss of £6,000 (84,000 - 28,000 - 31,600
- 18,400) is carried forward against future trading profits (under
s.83 ITA 2007).
 student accountant 09/2009
14
This motor car is not included in the general pool because there is private
Motor car (2) has CO2 emissions between 111 and 160g per kilometre, and
therefore qualifies for writing-down allowances at the rate of 20%.

TABLE 2: MING’S CAPITAL ALLOWANCE CLAIM FOR YEAR ENDED 5 APRIL 2010 (EXAMPLE 6)

Pool Motor Motor Special Allowances

car car rate pool
£ £ £ £ £ £
WDV brought forward 16,700 18,800
Additions
Motor car (1) 28,300
Motor car (2) 11,600
Motor car (4) 10,100
Proceeds – Motor car (4) 4,198 (8,300)
45,000 1,800
WDA – 20% (9,000) 9,000
WDA – restricted (3,000) 3,000
WDA – 20% (2,320) x 85% 1,972
WDA – 10% 4,198 (180) 180
36,000
Addition qualifying for AIA and FYA
Equipment 61,400
AIA – 100% (50,000) 50,000
11,400
FYA – 40% (4,560) 4,560
6,840
Addition qualifying for FYA
Motor car (3) 16,800
FYA – 100% (16,800) 16,800
–
4,198 4,198 4,198 4,198
WDV carried forward 42,840 15,800 9,280 1,620 85,512
Total allowances 85,512

TABLE 2 NOTES
¤ Motor car (1) has CO2 emissions between 111 and 160g per kilometre, and therefore qualifies for
writing‑down allowances at the rate of 20%.
use by Ming.

¤ Motor car (2) has CO2 emissions between 111 and 160g per kilometre, and therefore qualifies for
writing‑down allowances at the rate of 20%. This motor car is not included in the general pool because
there is private use by Ming.
¤ Motor car (3) has CO2 emissions up to 110g per kilometre and therefore qualifies for the 100% first
year allowance.
¤ Motor car (4) has CO2 emissions over 160g per kilometre and therefore qualifies for writing‑down
allowances at the rate of 10%. There is no balancing allowance on the disposal of this motor car
because the expenditure is included in a pool.
 15
Extended loss relief is capped at a maximum of £50,000. For limited companies it
applies to loss‑making accounting periods ending between 24 November
technical

TABLE 3: LOSER LTD’S RESULTS (EXAMPLE 12)

Year ended Period ended Year ended Year ended Year ended
31 December 30 September 30 September 30 September 30 September
2005 2006 2007 2008 2009
£ £ £ £ £
Trading profit/(loss) 84,000 13,800 15,200 78,700 (146,800)
Property business
profit 5,000 4,600 4,000 – –

Gift Aid donations (800) (1,000) (1,200) – –

Assuming that Loser Ltd claims relief for its trading loss as early as possible, its profits chargeable to
corporation tax will be as follows:

Year ended Period ended Year ended Year ended

31 December 30 September 30 September 30 September
2005 2006 2007 2008
£ £ £ £
Trading profit 84,000 13,800 15,200 78,700
Property business
profit 5,000 4,600 4,000 –
89,000 18,400 19,200 78,700
Loss relief (s393A) (12,400) (18,400) (19,200) (78,700)
76,600 – – –
Gift Aid donations (800) – – –
Profits chargeable to
2008 and 23 November 2010.

corporation tax 75,800 – – –

TABLE 3 NOTES
¤ The amount of unrelieved trading loss for the year ended 30 September 2009 is £18,100 (146,800 -
78,700 - 19,200 - 18,400 - 12,400), and this will be carried forward (under s.393(1) ICTA 1988) against
future trading profits.
¤ There is no restriction to the amount of loss relief for the year ended 30 September 2008 as this is
within the normal 12-month carry back period.
¤ For the year ended 31 December 2005 loss relief is limited to £12,400 (50,000 - 19,200 - 18,400), being the
balance of the £50,000 limit. This is less than the maximum possible relief of £22,250 (89,000 x 3/12).
¤ Without the extended relief it would have only been possible to claim loss relief of £78,700 for the year
ended 30 September 2008.
¤ If Loser Ltd had ceased trading on 30 September 2009 then relief for the terminal loss of £146,800
would have been given in exactly the same way except that the relief for the year ended 31 December
2005 would have been £22,250 instead of £12,400, since the £50,000 limit would not then apply.
 student accountant 09/2009
set out are relevant to Paper P6 (UK). This summarises the additional changes
the June or December 2010 sittings. All of the changes relating to Paper F6 (UK)
made by the Finance Act 2009 which have an effect on the Paper P6 (UK) syllabus.
This should be read by those students who are taking Paper P6 (UK) at either
Paper P6 (UK)
This should be read by those of you who are taking
Paper P6 (UK) at either the June or December
2010 sittings. All of the changes relating to Paper
F6 (UK) set out earlier in this article are relevant
to Paper P6 (UK). This article summarises the
additional changes made by the Finance Act 2009
that have an effect on the Paper P6 (UK) syllabus.
All of the exclusions set out in the Paper F6 (UK)
article apply equally to Paper P6 (UK) unless they
are referred to below.
Please note that if you are sitting Paper P6 (UK)
in December 2009, you will be examined on the
Finance Act 2008, which is the legislation as it
relates to the tax year 2008–09. Accordingly, this
article is not relevant to you, and you should instead
refer to the Finance Act 2008 article published on
the ACCA website.
INCOME TAX
Foreign dividends
The Finance Act 2008 introduced a 10% tax credit
for UK resident individuals holding less than 10%
of the shares of non-UK resident companies. The
tax credit operates in the same way as it does in
relation to dividends from UK resident companies;
the foreign dividend income is grossed up at
100/90, the gross income is taxed at 10%/32.5%
and there is a 10% tax credit. The tax credit is not
repayable in cash.
The Finance Act 2009 has extended the
availability of this tax credit to UK residents who
own 10% or more of the shares in non-UK resident
companies provided the company is resident in
a qualifying territory. A qualifying territory is one
which has a double taxation treaty with the UK that
includes a non-discrimination clause.
16
The remittance basis
The remittance basis is available in respect of:
¤ overseas income where the taxpayer is UK
resident and either non-ordinarily resident or
non domiciled
¤ chargeable gains realised on assets situated
overseas where the taxpayer is UK resident or
ordinarily resident, but not UK domiciled.
The Finance Act 2008 introduced the requirement
to pay £30,000 in certain circumstances in order
to claim the remittance basis subject to it applying
automatically where an individual has unremitted
income and gains of less than £2,000. The
remittance basis also applies automatically where
the individual:
¤ is resident in the UK for no more than six of the
nine tax years prior to the year in question or is
under the age of 18 throughout the year; and
¤ has no UK income/gains (other than taxed
investment income of no more than £100) (prior
to the Finance Act 2009, there was a requirement
for the individual to have no UK income/gains);
and
¤ has not remitted any income or gains during the
tax year.
Furnished holiday lettings
The letting of furnished holiday accommodation
is treated as if it were a trade. Accordingly, any
losses arising can be relieved as if they are trading
losses, pension contributions can be made in
respect of the income, and certain capital gains
reliefs are available. This beneficial treatment will
no longer be available from 2010–11. However, for
the tax year 2009–10, the rules have been extended
to include properties in the European Economic
Area and not just those in the UK.
17
lost revenue to HMRC of more than £25,000 will be made public. This applies to
The details of tax defaulters whose deliberate actions result in potential
both individuals and companies.
technical
Enterprise investment scheme (EIS)
An individual who has subscribed for EIS shares
is able to claim to have the whole or part of the
subscription treated as if made in the previous tax
year. There is no longer a need for the shares to be
acquired in the first six months of the tax year for
this claim to be available. In addition, there is no
longer a limit on the amount subscribed that can
be treated in this way provided the EIS limit for the
previous year is not exceeded.
There has been a simplification of the
requirements relating to the EIS company’s use of
the funds acquired. The company must now use the
whole of the funds in its qualifying trade in the two
years following the share issue.
Venture capital trusts (VCT)
The change to the requirement in respect of the use
of invested funds by an EIS company also applies
to companies invested in by a VCT. Accordingly, the
money invested by the VCT must be used by the
investee company in its qualifying trade within the
two years following the share issue.
Capital allowances
The changes made to plant and machinery capital
allowances and industrial buildings allowances set
out in the Paper F6 (UK) article above, together with
the related exclusions, also apply to Paper P6 (UK).
Deliberate tax defaulters
The details of tax defaulters whose deliberate
actions result in potential lost revenue to HMRC
of more than £25,000 will be made public. This
applies to both individuals and companies. The
details will not be published if the taxpayer makes
a full disclosure (prompted or unprompted) of the
actions resulting in the potential lost revenue.
Defaulters who have incurred a penalty for
the deliberate understatement of tax of at least
£5,000 will be required to submit more detailed
information of their tax affairs for the following
five years.
CORPORATION TAX
Dividend income
The Finance Act 2009 has made changes to
the taxation of dividend income received by
companies. Under the new rules, most dividends
received, from both UK resident and non-resident
companies are not subject to corporation tax
but are taken into account when calculating franked
investment income and the rate of corporation tax
payable. There are exceptions to these rules but
the exceptions are not in the syllabus. It should
therefore be assumed in the exam that all dividends
received from both UK and non-UK resident
companies are exempt from corporation tax.
Controlled foreign companies (CFCs)
A CFC is a non-UK resident company that is
controlled by UK resident persons and pays less
than three quarters of the tax that it would have to
pay if it were UK resident. The profits of a CFC may
be apportioned to a UK company such that they are
then subject to UK corporation tax.
No apportionment is necessary where the CFC
satisfies one of the exceptions, for example, where
its accounting profits do not exceed £50,000. The
exception for companies that exhibit an acceptable
distribution policy has been repealed by the Finance
Act 2009.
Corporate venturing scheme (CVS)
The change to the requirement in respect of the use
of invested funds by an EIS company also applies to
CVS investments. Accordingly, the money invested
must be used by the CVS company in its qualifying
trade within the two years following the share issue.
Electronic filing of VAT returns is to be made compulsory from 1 April 2010
student accountant 09/2009
of £100,000 or more and all newly VAT registered businesses regardless of
for all VAT registered businesses with an annual VAT exclusive turnover
Duties of senior accounting officers
Rules have been introduced that oblige the senior
accounting officer of a large company or group of
companies to:
¤ ensure that the company establishes and
maintains tax accounting arrangements
that enable its tax liabilities to be
calculated accurately
¤ provide an annual certificate to HMRC to the
effect that appropriate accounting arrangements
were in existence together with an explanation,
where necessary, of any inadequacies.
A large company is defined as one with a turnover
of more than £200m or a balance sheet total of
more than £2bn.
VALUE ADDED TAX (VAT)
Electronic filing of VAT returns
Electronic filing of VAT returns is to be made
compulsory from 1 April 2010 for:
¤ all VAT registered businesses with an annual VAT
exclusive turnover of £100,000 or more;
and
¤ all newly VAT registered businesses regardless of
their turnover.
Partial exemption
The recovery of non-directly attributable input tax
by a partially exempt business is by reference to
the vatable proportion of its turnover, subject to the
de minimis limits. An annual adjustment is made
in order to ensure that the total VAT recovered is in
accordance with the figures for the year as a whole.
their turnover.
18
You need to be aware of two changes to partial
exemption introduced by the Finance Act 2009.
When calculating the amount of recoverable input
tax for a quarter, the trader can now choose to use
the percentage for the previous year rather than
the partial exemption percentage for that particular
quarter. The trader must use the same method for
the whole of the year.
The method used will not make any difference to
the total amount of VAT recovered as the annual
adjustment will ensure that the final amount
recovered is in accordance with the figures for the
whole year. However, a business may find it easier
from an administration point of view to use the
partial exemption percentage for the previous year
as opposed to calculating the actual percentage for
each quarter.
The second change is that the trader can now
choose to enter the annual adjustment on the return
for the final period of the year rather than the first
period following the end of the year.
Place of supply of services
Prior to 1 January 2010 the basic rule is that the
place of supply of services is the place where the
supplier has established his business. There are
then various exceptions to this basic rule.
For example, the place of supply of various
professional services is the place where the customer
belongs if the customer is outside the EU or is a
business customer within the EU. Under these rules,
a VAT registered customer in the UK was required
to account for output tax on such services and then
reclaim it as input tax in the normal way; this is
known as the reverse charge procedure.
On or after 1 January 2010 the basic rule is that
the place of supply of services to a business is
where the customer has established that business.
Accordingly, where a business customer in the UK
purchases services from overseas, it must use the
reverse charge procedure just as it would have done
for professional services under the old rules.
The place of supply to non-business customers
continues to be the place where the supplier has
established his business.
19 technical

The rates and limits of stamp duty and stamp duty land tax for 2009–10 are the
same as those in 2008–09. There are no examinable changes to these taxes in
The rules in force prior to 1 January 2010 will not INHERITANCE TAX
be tested from the June 2010 sitting onwards such The nil rate band
that candidates need only know the new rules. The nil rate band for 2009–10 is £325,000
(2008–09 £312,000).
Time of supply of services to which the reverse
charge applies Agricultural property relief
The time of supply, or tax point, of a single supply Agricultural property relief is available in respect
to which the reverse charge procedure applies is the of the agricultural value of agricultural property
earlier of the time the service is completed and and reduces the value transferred by either 50% or
the time the service is paid for. Where supplies 100%. The definition of agricultural property has
are continuous, the time of the supply will be the been extended to include property in the European
end of each billing or payment period. Where there Economic Area and not just property in the UK,
are no billing or payment periods, the time of Channel Islands and the Isle of Man.
supply will be the earlier of 31 December each year
and the date on which any payment is received. STAMP DUTY AND STAMP DUTY LAND TAX
The rates and limits for 2009–10 are the same as
The flat rate scheme those in 2008–09.
The flat rate scheme simplifies administration by There are no examinable changes to these taxes
enabling a trader to calculate the amount of VAT in respect of the exams in 2010.
due to HMRC by reference to a percentage of
VAT inclusive turnover rather than by calculating Further reading
output tax less input tax. The changes introduced by the Finance Act 2009
In order to join the scheme, the annual vatable will be incorporated into the following articles
turnover of the business (exclusive of VAT) must published on the ACCA website:
not exceed £150,000. The requirement for the total ¤ Corporation tax
annual turnover of the business (exclusive of VAT) ¤ Corporation tax and groups – parts 1 and 2
respect of the exams in 2010.

including exempt supplies to not exceed £187,500 ¤ Capital taxes

has been removed by the Finance Act 2009. ¤ International aspects
¤ Trusts and tax
CAPITAL GAINS TAX
Gift relief Rory Fish is examiner for Paper P6 (UK)
Gift relief is available on the gift or sale for less
than market value of certain categories of assets
including agricultural property that would qualify
for inheritance tax agricultural property relief.
The definition of agricultural property for the
purposes of inheritance tax has been extended to
include property in the European Economic Area
and not just property in the UK, Channel Islands
and the Isle of Man. Accordingly, agricultural
property situated in the European Economic Area
now qualifies for gift relief.
 student accountant 09/2009
20
2009 on CAT Paper 9 (UK). The sub headings refer to the headings in the main
This appendix outlines the effects of the changes made in the Finance Act

CAT PAPER 9 Industrial buildings allowance (IBA)

This appendix outlines the effects of the changes
made in the Finance Act 2009 on Paper 9 (UK).
The sub headings refer to the headings in
the main article on Paper F6 (UK), written by
David Harrowven.
INCOME TAX
Rates of income tax
article on Paper F6 (UK), written by David Harrowven.
CAT Paper 9 (UK) will follow the same treatment
for IBA as Paper F6 and therefore the writing-down
allowance for both exams in 2010 will be 2%.
Leased motor cars
These will be treated in the same way as Paper
F6 with 15% of leasing costs being disallowed for
cars with a CO2 emission rate in excess of 160g

The revised thresholds and the rates of tax shown per kilometre.

will also be used in CAT Paper 9 (UK). The use of
the 10% rate for savings income is examinable.

Personal allowance
Only the personal allowance for taxpayers under 65
is examinable in CAT paper 9 (UK) – information
on the higher allowances and the restriction limit
will not be given in the CAT Paper 9 rates and
allowances sheet.

Individual Savings Accounts (ISAs) The content of tax

Detailed knowledge of these remain outside the
syllabus but knowledge of income from ISAs being
articles does not amount to
non-taxable is examinable. advice on a particular
Company car and fuel benefits
matter and should not be
Calculation of the appropriate percentage for car taken as such. No reliance
benefits (including low emission and diesel cars)
and its use in the final car benefit calculation is
should be placed on the
examinable – as is the car fuel benefit. content of an article as the
Official rate of interest
basis of any decision.
The revised rate of 4.75% will also be used in CAT The authors and ACCA
Paper 9 (UK).
expressly disclaim all liability
Capital allowances to any person in respect of
The new rules for capital allowances for cars will
be examinable with rates being given in the rates
any indirect, incidental,
and allowances sheet. A car’s CO2 emission rate will consequential or other
always be given in the exam.
Both the temporary re-introduction of FYA and
damages relating to the use
the transitional rules for expensive cars will be of tax articles published in
required knowledge in CAT Paper 9 (UK).
Student Accountant
magazine.
21 technical

between 24 November 2008 and 23 November 2010 will not be examinable. The
The Loss relief transitional rule for losses occurring in periods ending

examiner will not set questions involving this rule – questions involving
carry forward losses and normal terminal loss rules may be set.
Loss relief NATIONAL INSURANCE CONTRIBUTIONS (NIC)
The transitional rules of loss relief will not be Class 1 and Class 1A NIC
examined – the examiner will not set any questions The new rates and thresholds will also be used in
involving loss relief in either of the two exams both 2010 exams for CAT Paper 9 (UK). Where NIC
in 2010. is required to be calculated on a weekly or monthly
basis the new thresholds should be divided by 52
Pension schemes or 12 respectively.
The new annual allowance and lifetime allowances
will be given in the exam and knowledge of both Class 2 and Class 4 NIC
the excess charge and the additional charge when The same detail will be used in both exam sessions
pensions are taken is expected. in 2010 in CAT Paper 9 (UK).

CORPORATION TAX VALUE ADDED TAX

Rates of Corporation Tax Registration and Deregistration Limits
The rates of tax and the upper and lower limits will The new registration and deregistration limits will
be given in the rates and allowances sheet in the also be used in the CAT Paper 9 (UK) June and
same way as Paper F6 and will remain examinable. December 2010 exams.

Loss relief Standard rate of VAT

The transitional rule for losses occurring in The same detail will be used in CAT Paper 9 (UK) as
periods ending between 24 November 2008 and is illustrated for Paper F6.
23 November 2010 will not be examinable. The
examiner will not set questions involving this rule – TAX MANAGEMENT
questions involving carry forward losses and normal All the detail included under this heading in the
terminal loss rules may be set. Paper F6 article is also examinable in the CAT Paper
9 (UK) exam. The calculation of interest however
Overseas dividends. remains outside the syllabus.
These remain outside of the CAT Paper 9
(UK) syllabus. Keith Molson is examiner for CAT Paper 9 (UK)

CAPITAL GAINS TAX TAX Articles

Individual exemption limit The content of tax articles does not amount to
The new limit of £10,100 for 2009–10 will also be advice on a particular matter and should not be
used in CAT Paper 9 (UK). taken as such.
No reliance should be placed on the content
Rate of capital gains tax of an article as the basis of any decision. The
Both the 18% rate and the effective rate of 10% for authors and ACCA expressly disclaim all liability
assets qualifying for Entrepreneurs’ relief will apply to any person in respect of any indirect, incidental,
to CAT Paper 9 (UK). consequential or other damages relating to
the use of tax articles published in Student
Accountant magazine.