These questions are intended to get you thinking about some of the various tax issues that you need to be aware of in order to advise on the choice of business vehicle. They may highlight some areas of your basic tax knowledge that need to be worked on.
(1). QW Ltd pays corporation tax at the small company rate. In the year ended 31 March 2014 it pays a dividend of £10,000 to Mr Voight, a higher rate taxpayer.
(i) What is the total tax borne by QW Ltd and Mr Voight in respect of the dividend?
(ii) What is the effective rate of tax borne by QW Ltd and Mr Voight on the profits used to pay the dividend?
(2). Camille was an employee until 31 August 2013. The whole of her income tax liability has always been settled via PAYE. On 31 August 2013 Camille resigned and began a new unincorporated business on 1 September 2013. This new business generates £4,000 of taxable profits per month.
When will Camille first be required to pay tax in respect of the profits of the business?
(3). State whether the following statements are true or false in respect of the gift of a building used for three years in a continuing unincorporated business.
A Entrepreneurs’ relief is not available.
B Business property relief is available.