Tax Compliance (UK) Flashcards

The UK corporation tax payment deadline for a large company (paying by instalments) is based on:

Answer: Quarterly instalments during and after the accounting period

Large companies pay corporation tax in four quarterly instalments: two during the accounting period and two after. Very large companies pay even earlier instalments.

Which relief allows trading losses to be set against total income of the current or preceding accounting period for UK corporation tax?

Answer: Current year and carry-back relief

Under CTA 2010, a company can claim relief for a trading loss against total profits of the current period and, if not fully relieved, carry back to the previous 12 months. Extended carry-back was available for COVID years.

Entrepreneurs' Relief (now Business Asset Disposal Relief) reduces the CGT rate to:

Answer: 10%

Business Asset Disposal Relief (BADR) applies a 10% CGT rate on qualifying gains from disposal of a business or business assets, subject to a lifetime limit (£1 million).

For UK employment income purposes, the employer's Class 1 National Insurance rate above the secondary threshold is:

Answer: 15%

From April 2025, the employer's Class 1 NIC rate increased to 15% on earnings above the secondary threshold (£5,000 per year from April 2025), announced in the October 2024 Budget.

For UK self-employed individuals, Class 4 NIC is charged on profits between the lower profits limit and upper profits limit at:

Answer: 8%

Class 4 NICs are charged at 6% on profits between £12,570 and £50,270 following the reduction from 9% in 2024. Above £50,270, Class 4 NICs are charged at 2%.

The UK gift aid scheme allows a basic rate taxpayer to make a donation whereby:

Answer: The charity reclaims basic rate tax from HMRC, grossing up the donation

Under gift aid, the charity reclaims 20% basic rate tax from HMRC, effectively grossing up the net donation by 25%. Higher/additional rate taxpayers can also claim higher rate relief via self-assessment.