Finance Act 2015

Relevant to Foundations in Taxation (FTX) (UK) –
December 2016 sitting only

This appendix outlines the effects of the changes made in the Finance Act 2015 and Finance (No 2) Act 2015 on FTX (UK). The sub headings refer to the headings in the main article on F6 (UK).

INCOME TAX

Rates of income tax
The revised thresholds and the rates of tax shown will also be used in FTX (UK). The use of the 0% rate for savings income when it falls within the first £5,000 of taxable income is examinable.

Personal allowance
The personal allowance will be examined in a similar way to F6 (UK). Both the withdrawal of the allowance where income exceeds £100,000, and the impact of personal pension contributions and gift aid donations on the calculation of adjusted net income will be examinable.

The transferable amount of personal allowance to a spouse or civil partner is not examinable and will not be given in the FTX (UK) rates and allowances sheet.

EMPLOYMENT INCOME

Company car benefit and car and van fuel benefit
FTX (UK) will examine the same detail as shown for F6 (UK).

Medical treatment
The new £500 annual exemption will be examinable in the December 2016 exam.

Official rate of interest
The official rate of 3% will be used in the December 2016 exam.

PAYE – real time reporting
FTX (UK) will not examine the late filing penalties in the December 2016 exam.

CAPITAL ALLOWANCES

Annual investment allowance
FTX (UK) will continue to use the current annual investment allowance limit of £500,000 in the December 2016 exam. This will be the case regardless of the period covered by an exam question, so, for example, the AIA limit for the year ended 31 March 2016 will be £500,000.  Questions examining the restriction of annual investment allowance and writing down allowances (WDA) for short periods may be examined.

The rates and allowances section for FTX (UK) will show the same detail as that shown for F6 (UK) but first year allowance (FYA) remains outside the syllabus.

INDIVIDUAL SAVINGS ACCOUNTS (ISAs)

Detailed knowledge of these remains outside the syllabus for FTX (UK) but knowledge of income from these accounts being non-taxable is examinable. In line with F6 (UK) the term ISA (rather than NISA) will be used in FTX (UK) from the December 2016 sitting.

NATIONAL INSURANCE CONTRIBUTIONS (NIC)

Class 1, Class 1A NIC, Class 2 and Class 4 NIC
The same detail will be examinable in FTX (UK) as that shown for F6 (UK) and therefore the rates and allowances sheet for FTX (UK) will show the same detail for national insurance contributions as that shown for F6 (UK).

PENSION SCHEMES

Awareness of the annual allowance and lifetime allowance limits is required but the additional tax charges for excess contributions and for exceeding the lifetime allowance continue not to be examinable. The method of obtaining tax relief for contributions to both occupational and personal schemes remains examinable.

The carry forward provisions for the annual allowance will continue not to be examinable in FTX (UK) therefore only the annual allowance limit of £40,000 will be shown in the tax rates and allowances section.

The rules regarding pension flexibility are not examinable.

CAPITAL GAINS TAX

Annual exempt amount
The new limit of £11,100 for the tax year 2015–16 will also be used in FTX (UK).

Rate of capital gains tax
The 18% and 28% rates will continue to be applied in FTX (UK).

No capital gains tax questions will be set which involve the effects of pension contributions and gift aid payments on the income tax thresholds.

Entrepreneurs’ relief
The rate of tax (10%) and the £10 million lifetime limit remain required knowledge for FTX (UK).

The rates and allowances section for FTX (UK) will show the same detail for capital gains tax as that shown for F6 (UK).

Valuing quoted shares
The change in the basis of valuing quoted shares when they are disposed of by way of a gift will be examined in the same way as at F6 (UK).

INHERITANCE TAX

This remains outside the syllabus for FTX (UK).

CORPORATION TAX

Rates of corporation tax
Due to the introduction of the single rate of corporation tax, FTX (UK) will not examine rates of tax for previous years, franked investment income (FII) or the effect of 51% group companies.

This will be the case regardless of the period covered by an exam question, so, even if a period spans 1 April 2015, a 20% rate of tax should be used.

Quarterly instalment payments
FTX (UK) will continue to examine these. However, given that franked investment income (FII) and the effect of 51% group companies are not examinable, a relevant exam question will not require these to be considered in the determination of whether a company has profits in excess of £1.5 million or not.

VALUE ADDED TAX (VAT)

Registration and deregistration limits
The new registration and deregistration limits will also be used in the December 2016 exam for FTX (UK).

Standard rate of VAT
The unchanged standard rate of 20% will be used in FTX (UK).

Discounts
The new rules will be examined in FTX (UK) as in F6 (UK).

Penalties for late filing of VAT returns and late payment of VAT
These remain outside the syllabus for FTX (UK). The only penalties examinable in FTX (UK) continue to be the late registration penalties.
 

Written by a member of the Paper FTX (UK) examining team