Relevant to Foundations in Taxation (FTX) (UK) – June 2016 sitting
This article outlines the effects of the changes made in the Finance Act 2014 on Paper FTX (UK). The sub-headings refer to the headings in the main article on Paper F6 (UK) (see 'Related links').
Rates of income tax
The revised thresholds and the rates of tax shown will also be used in Paper FTX (UK). The use of the 10% rate for savings income is examinable.
Personal allowance
Only the personal allowance for taxpayers born on or after 6 April 1948 is examinable in Paper FTX (UK). The withdrawal of the allowances for high earners and the effect of personal pension plan contributions and gift aid on the calculation of adjusted net income are also examinable.
The higher age-related allowances and the income limit for these are not examinable and will not be given in the Paper FTX (UK) rates and allowances sheet.
Company car benefit and car and van fuel benefit
Paper FTX (UK) will examine the same detail as shown for Paper F6 (UK).
Beneficial loans
The new £10,000 limit will be examinable in Paper FTX (UK).
Medical treatment
This exemption will not be examinable in the June and December 2015 examinations.
Official rate of interest
The official rate of 3.25% will be used in the June and December 2015 exams.
PAYE – real time reporting
Paper FTX (UK) will not examine the late filing penalties in the June and December 2015 examinations.
Annual investment allowance
The same detail as that used in Paper F6 (UK) will be examinable in Paper FTX (UK). This includes the restriction on annual investment allowance and writing down allowances (WDA) for short periods but not for periods straddling 6 April 2014.
The rates and allowances sheet for Paper FTX (UK) will show the same detail as that shown for Paper F6 (UK), except for the 100% first year allowance for low emission cars, which will not be included in the FTX (UK) rates and allowances sheet as it is excluded from the FTX (UK) syllabus.
Detailed knowledge of these remains outside the syllabus for FTX (UK) but knowledge of income from these accounts being non-taxable is examinable.
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 will not 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 Paper FTX (UK).
Rates of corporation tax
The rates of tax and the upper and lower limits will be given in the rates and allowances sheet in the same format as for Paper F6 (UK) and will remain examinable. However no question will be set which involves an accounting period straddling 1 April 2014 where two different tax rates would apply.
Annual exempt amount
The new limit of £11,000 for the tax year 2014-15 will also be used in Paper FTX (UK).
Rate of capital gains tax
The 18% and 28% rates will continue to be applied in Paper 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 remains required knowledge for Paper FTX (UK).
Principal private residence relief
The reduced final period of ownership exemption will be examinable in Paper FTX (UK).
The rates and allowances sheet for Paper FTX (UK) will show the same detail for capital gains tax as that shown for Paper F6 (UK).
This remains outside the syllabus for Paper FTX (UK).
Class 1 and Class 1A NIC
The new rates and thresholds will also be used in the June and December 2015 exams for Paper FTX (UK). Where NIC is required to be calculated on a weekly or monthly basis the thresholds should be divided by 52 or 12 respectively.
Class 2 and Class 4 NIC
The same detail will be used in the June and December 2015 exams as that for Paper F6 (UK).
Employment allowance
This will be examinable in future Paper FTX (UK) exams.
The rates and allowances sheet for Paper FTX (UK) will show the same detail for national insurance contributions as that shown for Paper F6 (UK).
Registration and deregistration limits
The new registration and deregistration limits will also be used in the June and December 2015 exams for Paper FTX (UK).
Standard rate of VAT
The unchanged standard rate of 20% will be used in Paper FTX (UK).
Discounts
The current rules will continue to be examined in Paper FTX (UK) as in Paper F6 (UK).
VAT penalties for late filing of VAT returns and late payment of VAT
These remain outside the syllabus for Paper FTX (UK). The only penalties examinable in Paper FTX (UK) continue to be late registration penalties.
Late payment interest and repayment interest
The calculation of these remains outside of the syllabus for Paper FTX (UK).
Written by a member of the Paper FTX (UK) examining team