Taxation of the unincorporated business for ATX-UK - part 2: self-test

Test your understanding

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). In the year ended 31 March 2024, QW Ltd paid a dividend of £12,000 to Mr Voight, a higher rate taxpayer. QW Ltd pays corporation tax at the main rate. Mr Voight did not receive any other dividends in 2023/24.

(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 2023. The whole of her income tax liability has always been settled via PAYE. On 31 August 2023 Camille resigned and, on 1 September 2023, began a new unincorporated business. 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 her new business?

(3). State whether the following statements are true or false in respect of the gift of a building which the current owner has used for the last three years in a continuing business in which he is a partner.

Business asset disposal relief is not available.
Business property relief is available.

(4). A new business began trading on 1 July 2023 and will prepare accounts for the 15-month period ending 30 September 2024. Initially it rented the machinery it required but on 1 September 2024 it purchased machinery for £310,000.

What are the capital allowances for the 15-month period if the business is either:

(i) unincorporated, or
(ii) a company?