This appendix outlines the effects of the changes made in the Finance Act 2022 on FTX-UK. The sub-headings refer to the headings in the main Finance Act 2022 article on TX-UK.
Income tax
Rates of income tax
The same thresholds and the rates of tax shown will also be used in FTX-UK.
Personal allowance
The personal allowance will be examined in a similar way to TX-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 rules regarding the transfer of some of the personal allowance to a spouse or civil partner will not be examined and therefore the transferable amount will not be given in the FTX-UK rates and allowances.
Savings income
FTX-UK will examine savings income in a similar way to TX-UK; however tax planning remains outside of the FTX-UK syllabus, therefore the impact of transferring savings income to a spouse or a civil partner will not be examined.
The savings income nil rate bands will be given in the FTX-UK tax rates and allowances.
Dividends
FTX-UK will examine dividends in a similar way to TX-UK; however tax planning between spouses, civil partners and the impact on the decision to incorporate or extract funds from a company will not be examined.
The dividend nil rate band will be given in the FTX-UK tax rates and allowances.
Employment income
Company car and fuel benefits
FTX-UK will examine the same detail as shown for TX-UK.
Electric and hybrid-electric cars are examinable and therefore all of the following will be examinable in FTX-UK:
- The percentage rates applying to petrol cars (and diesel cars meeting the RDE2 standard).
- Cars with zero emissions.
- Hybrid-electric cars where the electric range will determine the car benefit percentage.
- The 4% surcharge for diesel cars which do not meet the RDE2 standard.
The same car benefit percentage detail will be given in the FTX-UK rates and allowances as that given in TX-UK.
Company van and fuel benefits
Company van and fuel benefits will continue to be examinable in FTX-UK and the scale charges will be included in the FTX-UK tax rates and allowances. Zero emission vans will, however, not be examined and the scale charges will not be shown in the tax rates and allowances table.
Approved mileage allowance
FTX-UK will examine this in a similar way as that in TX-UK.
Official rate of interest
The official rate of 2% will be used in both of the 2023 examinations.
Capital allowances
FTX-UK will examine the current annual investment allowance limit of £1,000,000 in the 2023 examinations.
Structures and buildings allowance
The structures and buildings allowance (SBA) of 3% will be examined in the 2023 examinations in the same way as they are for TX-UK. This will include future disposals of qualifying structures and buildings and the effect of the allowances claimed on the capital gain calculation.
The rates and allowances section for FTX-UK will show the same detail as that shown for TX-UK.
Property income finance costs
The rules regarding finance costs of residential property remain outside the FTX – UK 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.
National insurance contributions (NIC)
Class 1, Class 1A, Class 2 and Class 4 NIC
The new rates and thresholds will apply to FTX-UK and the same detail will be given in the rates and allowances as that given for TX-UK.
The employment allowance
The threshold of £5,000 will be examined in FTX-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 the tapered annual allowance are not examinable.
Capital gains tax
Annual exempt amount
For the tax year 2022/23, the unchanged limit of £12,300 will be used in FTX-UK.
Rate of capital gains tax
The rates of capital gains tax will be examined in FTX-UK in a similar way to that used in TX-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.
Business asset disposal relief
The rate of tax of 10% and the £1 million lifetime limit remain required knowledge for FTX-UK.
Investors’ relief
This relief remains outside of the FTX-UK syllabus.
The rates and allowances section for FTX-UK will show the same detail (with the exception of the detail on investors’ relief) for capital gains tax as that shown for TX-UK.
Inheritance tax
This remains outside the syllabus for FTX-UK.
Corporation tax
Rates of corporation tax
The single rate of 19% will apply in FTX-UK.
Enhanced capital allowances for companies only
The temporary super deduction of 130% for main pool items and the 50% first year allowance for special rate pool items will be examined in the same way as TX-UK.
Late payment interest and repayment interest
The calculation of these remains outside of the FTX-UK syllabus.
Value added tax (VAT)
Registration and deregistration limits
The unchanged registration and deregistration limits will also be used in both the 2023 examinations for FTX-UK.
Standard rate of VAT
The unchanged standard rate of 20% will be used in FTX-UK.
Recent government announcements
The Energy Profits Levy was introduced on 26 May 2022. We will not be examining those changes announcing the introduction of a temporary energy profits levy and related investment allowance.
Written by a member of the FTX-UK examining team