Income Tax

Income Tax

Made Simple

1st Edition - January 1, 1985

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  • Author: Henry Toch
  • eBook ISBN: 9781483135441

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Income Tax: Made Simple discusses the fundamental concepts of taxation. It is addressed to the growing number of people, who need to have a better understanding of the effects of taxation on the financial side of life. This comprehensive text includes discussions of the UK's tax system and its administration; general principles of income tax; tax reform proposals; the taxation of husband and wife; capital allowances; taxation of employees; and taxation of dividends and other income. The final chapter on 'Tax Planning' sets out how the individual can reduce his or her tax bill at various stages during one's life-time. The book will be helpful to students of business law and accountancy preparing for examinations of all the major professional bodies, e.g., Institutes of Chartered Accountants, for England and Wales and Scotland, Institute of Bankers, Institute of Scottish Bankers, Association of Certified Accountants, Chartered Institute of Secretaries and Administrators, Institute of Cost and Management Accountants, and the Law Society. It is also suitable for students on Degree Courses at Universities and Polytechnics and BTEC students in accountancy, business studies, and law.

Table of Contents

  • Preface

    1 Introduction

    1.1 Why Pay Taxes?

    1.2 Basic Definitions

    1.3 Taxation and Incentives

    1.4 The Poverty Trap

    1.5 The Effect of Inflation

    1.6 The Relative Importance of Individual Taxes

    1.7 Taxation in Different Countries

    1.8 The Revision Test

    2 The Present System and Its Administration

    2.1 The History and the Present System

    2.2 The Officials

    2.3 Organization

    2.4 Regional and Local Offices

    2.5 The Procedure of Assessment

    2.6 The Black Economy

    2.7 Annual Tax Return

    2.8 Additional Assessments

    2.9 Error or Mistake Claims

    2.10 Tax Remission due to Official Error

    2.11 Penalties

    2.12 Interest on Unpaid Tax and Repayment Supplement

    2.13 Taxation at Source

    2.14 Appeals Procedure

    2.15 Procedure at the Appeal Hearing

    2.16 Costs Involved when Disagreeing with the Inspector

    2.17 Adequacy of the Inland Revenue Powers

    2.18 Revision Test

    3 General Principles of Income Tax

    3.1 The Income Tax Year

    3.2 The Nature of Tax Law

    3.3 Basic Questions

    3.4 What is Income for Tax Purposes?

    3.5 Who is Liable to Pay Tax?

    3.6 Income Specifically Exempt from Tax

    3.7 Receipts Not Regarded as Income

    3.8 Persons Specifically Exempt from Tax

    3.9 The Concept of Total Income

    3.10 Tax-Free Personal Allowances

    3.11 Higher Rate Bands

    3.12 Revision Test

    4 The Treatment of Husband and Wife

    4.1 Historical Development

    4.2 The Effect of a Claim under Section 38 of ICTA

    4.3 Effect of Wife's Earnings Election

    4.4 Equal Opportunities Commission's Response to Green Paper

    4.5 Proposals during the 1983 Election

    4.6 The Effect of Unemployment on the Present Situation

    4.7 The Use of the Seven Year Covenant to Save Tax

    4.8 The Breakdown of Marriage

    4.9 Revision Test

    5 Income from Land and Property

    5.1 Schedule A

    5.2 Basis of Assessment

    5.3 Allowable Deductions

    5.4 Conditions Governing Allowances

    5.5 Losses

    5.6 Lost Rent Relief

    5.7 Premiums on Leases

    5.8 Other Payments treated as Premiums

    5.9 Top-Slicing Relief in Respect of Premiums

    5.10 Schedule B

    5.11 Revision Test

    6 Income of the Self-Employed

    6.1 What Constitutes Trading?

    6.2 What Constitutes a Profession?

    6.3 What Constitutes a Vocation?

    6.4 What Constitutes a Trading Receipt?

    6.5 Receipts to be Excluded

    6.6 Allowable Business Expenses

    6.7 Expenses Specifically Prohibited

    6.8 Expenses Specifically Allowed by Statute

    6.9 Stock Relief

    6.10 Basis Periods

    6.11 Change of Accounting Date

    6.12 Special Basis Periods for Farmers

    6.13 The Correct Schedule of Charge

    6.14 National Insurance Contributions

    6.15 Revision Test

    7 Capital Allowances

    7.1 What Assets Qualify

    7.2 Plant and Machinery

    7.3 Industrial Buildings and Structures

    7.4 Mines and Oilwells

    7.5 Agricultural Buildings

    7.6 UK Patents

    7.7 Scientific Research

    7.8 Dredging

    7.9 Know-how

    7.10 Hotels

    7.11 Crematoria and Cemeteries

    7.12 Small Workshops

    7.13 Enterprise Zones

    7.14 Revision Test

    8 Business and other Losses

    8.1 Loss in Trade Set against Other Income

    8.2 Loss In Early Years of a Business

    8.3 Loss in Aggregation

    8.4 Trading Losses Carried Forward

    8.5 Terminal Losses

    8.6 Loss of Trader Who Becomes Company Director

    8.7 Relief for Losses on Unquoted Shares in Trading Companies

    8.8 Annual Payments

    8.9 Revision Test

    9 Setting up in Business and Forming a Partnership

    9.1 Tax Treatment of Employee: Starting a Business

    9.2 Basis Period for a New Business

    9.3 Basis Period When Closing a Business

    9.4 Changing the Accounting Date

    9.5 Forming a Partnership

    9.6 What Constitutes a Partnership?

    9.7 Assessment of Partnerships - Share of Partners

    9.8 Change in Partnership

    9.9 Partner Residing Abroad

    9.10 Partnerships Involving Companies

    9.11 Revision Test

    10 Taxation of Employees

    10.1 Schedule E

    10.2 Foreign Emoluments

    10.3 Earnings from Overseas Employment

    10.4 Pensions

    10.5 Foreign Pensions and Annuities

    10.6 Employments with International Organizations

    10.7 The Difference between Schedule D and Schedule E

    10.8 Meaning of the Term 'Emoluments of Office or Employment'

    10.9 Basis of Assessment

    10.10 Directors of Higher-Paid Employees

    10.11 Exclusion of Certain Directors

    10.12 Dispensation for Payment of Allowable Expenses

    10.13 Fringe Benefits

    10.14 Scale Charges for Directors' and Higher-Paid Employees

    10.15 Scholarship Income

    10.16 Share Option and Share Incentive Schemes

    10.17 Profit Sharing Schemes

    10.18 Expenses

    10.19 Terminal Payments

    10.20 Pay as You Earn

    10.21 Purchasing Pension Rights

    10.22 Revision Test

    11 Treatment of Taxed and Untaxed Interest Dividends and other Income

    11.1 Interest-Paid Government Securities and Debentures

    11.2 Assessments Under Case III of Schedule D

    11.3 Basis of Assessment

    11.4 Transferring Untaxed Interest to Taxed Interest

    11.5 What Constitutes a New Source under Case III

    11.6 Taxed Interest, Annuities, Alimony, etc., Paid in Arrears

    11.7 Dividends

    11.8 Capital Distributions Made in Cash and Scrip Dividend Options

    11.9 Miscellaneous Income

    11.10 Furnished Holiday Letting

    11.11 Basis Period for Case VI

    11.12 Case VI Losses

    11.13 Claw-Back of Life Assurance Relief

    11.14 Chargeable Event on Non-qualifying Policies and Bonds

    11.15 Revision Test

    12 Treatment of Foreign Income and Non-residents

    12.1 Income Assessed Directly on the Recipient

    12.2 Basis of Assessment

    12.3 Double Tax Relief

    12.4 Double Tax Relief on Dividends Paid through an Agent

    12.5 Unilateral Relief

    12.6 Alimony

    12.7 Residence

    12.8 Ordinarily Resident

    12.9 Domicile

    12.10 Husband and Wife

    12.11 Taxation of Non-residents

    12.12 Revision Test

    13 The Treatment of Settlements and Trusts

    13.1 Tax Liability of the Deceased

    13.2 Deceased Estates

    13.3 Treatment of Trustees

    13.4 Trusts where the Settlor is Still Living

    13.5 Settlement by a Parent in Favor of Own Child

    13.6 Accumulation Settlements for Children

    13.7 Discretionary Trusts

    13.8 Foreign Trusts

    13.9 Revision Test

    14 Tax Planning

    14.1 Common Sense and a Sense of Proportion

    14.2 The Problem of Starting Employment

    14.3 Tax-Efficient Savings

    14.4 The Age Allowance Gap

    14.5 Getting Married

    14.6 Covenants

    14.7 Gifts and Settlements

    14.8 The Break-up of Marriage

    14.9 Setting up in Business

    14.10 Forming a Partnership

    14.11 Forming a Company

    14.12 Working Overseas

    14.13 Questions of Residence, Ordinarily Resident and Domicile

    14.14 Tax-Efficient Investment

    14.15 Considerations on Retirement

    14.16 Capital Conversion Schemes

    14.17 The Investment of Lump Sum (Redundancy) Payments

    14.18 Revision Test


    Table of Cases


Product details

  • No. of pages: 222
  • Language: English
  • Copyright: © Made Simple 1985
  • Published: January 1, 1985
  • Imprint: Made Simple
  • eBook ISBN: 9781483135441

About the Author

Henry Toch

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