TRADING INCOME

Advanced Taxation

Tutor : Owais Mirchawala

 (5-10 marks)
Trading Income Practice Question No. 1:
Mr. P has a tax adjusted trading Profit of 77,000.
Practice Question No. 3 W
Mr. X’s business generated tax adjusted trading profit of 58,000.
Income earned tax
individual
during
-
- - - - -

by
>
- - - - - - - -
-

an
year
a

through trading/business Income Tax Income tax

activity is
classified under

Tax
of Trading income
head Return Tax Return NIS
.
Non
Saving
77
v b Income tax & NIC on
trading income
Trading 000
Trading 58 000
-

, ,

Trade Total 77 000 Total 58

Badges
2
, income 000
of
,
,

3
, Basis Period Calculation personal allowance (12 570) , Personal allowance (12 570)
,

Taxable 64 430 Taxable income 45 430

4 Capital allowances income .
,

, [x-37 700 20 % 7540 Tax- 37 Too 7540

Trading
5 losses 20 %

ter
, X =
,
x =

26 ,730 40% 7130 x

Income tax & x
, 692
10 40% 3092
-
=
NK on income =

to 64 430 18 232 45 430 10 632

-

Trading income is
subject income tax under head , , , ,

Class
2NK E3 45 52 weeks 4 Class & NK L 3 45 per x 52 weeks
*4
of Non-Saving
x
.

income week
-
= =
=
.
= :
.
-

Tax rates
of
Non
Saving income are
-
:

band 137 700 Class

Basic rate 20% 4NKC
Trading income 77
, 000 Class 4NK
Trading income 58
-
=
=
000.
-
= :
-
: , :
,

Higher band 37 70 40 %
·

rate :
,
125 140 ,
=
12 570 k 0% = O 12 570
, x 0% = O
,

37 700 9% 37 700 9 % : 3393

-
Additional rate band : 125 141 .
X = 45 % , x =
3393 ,
x

Personal allowance 12 50
,270 50 , 270
available
against
is
of
570
-

26 730 Y 2% 535 7730 Y 2% 155

N/S
, =
=
income .

77 ,
000 3928 58 ,
000 3548

National Insurance
Trading income is also subject to Practice Question No. 2
-

Contribution two
Mr. D’s business generated tax adjusted trading profit of 68,000. O
(NIC)
. On trading types of
income ⑳@
= - >
- >
- >
-
-x -
-

Computer Income tax and NIC

°
-- -

NICs are
applicable :

I Class 2 NIC Income Tax

2 Class 4 NIC Tax Return -

N/S

Class & NIC is

fixed amount
of
E3 45
per week
Trading 68 Lax
.
-
a .
,
000 <

It applied I
to number weeks Total 68 37 700 7540
according
000

of
i
of
x 20%
-
=
, ,

trade operated In Personal (12 570) -

17 730 40% 7092
fiscal year allowance x
in which
,

a
year
=
was .
a ,

Taxable
weeks .Class& NIC is wired see
income 55 430 55 430 14 632

hereare
, , ,

of

E12 570 (Small threshold) Class E345 /week

.
projit 2 NKC x 52 weeks 4
-
=
=
,

Class 4 also
NIC is
payable on
trading income
-

at rates
of
: Class 4NK
Trading income 68
-
= :
,
000

I 12 570 0% 12 , 570 O
x 0 %
I
=
,

9% 37 700 9%
12 , 571 50 270 ,
=
, x =
3393

50 271
,
& =
2 % 50 270 ,

17 730
, Y 2% -
355

68 000
, 3748
 of Trade Basis Period Calculation
Badges
These the indicate Individuals accounts their business
are
factors which that whether
prepare for
- -

doing end tax to

forbe accounting
trade asset o not is
person of
is
any
year
a .

,
whereas

said
ORfisa
individual sells asset it either tax l
for
When
year year
-
an an is
,

trade
differen t for
Accountingyea .
classified as a OR as a Capital
·
end can

transaction. However tax , iS

yea
same

If regarded trade
allindividuals.Tax year startsorone
transaction then
for
- a is as

its income will be included in

trading income

tax Tax
head and income 2 NIC will be
payable year
3
Accounting year needs to be
aligned
-

it. while tax turn

making Act
on re .

If transaction Finance (applicable for

is
regarded capital transaction
Before
2023
from
·
a as -
exams

then
only
(GT will be
payable on it
. One
S 2024) ,
this
alignment activity was complex
and it used to result in double taxation
called
-

Badges of Trade which indicate that an

activity which was
overlapping rules/profits .

is a
trading activity includes : ·
From Finance Act 2023 tax
department has

introduced proportionate
1,
Frequency of Transaction adjustment as
per which

accounting year
Too Trade number months will be
of of
-

=
much

One Capital divided tax

simply
in
off yearand
- :

2) Ownership period Foreg. if accounting then

ye
is 31 December

Short : Trade 2026 it will be taxed in :

Capital 9 months
Long 3 months
-
=

done 2025/26 2026/27

3) Complimentary work
Trade
-

Complimentary work done : 3) March 2026

-
NO
Complimentary work :
Capital January 2026 3) December
2026
4
, Transaction is planned O not
Planned If old rules exist then
Trade
any overlapping profits of
-
-
:

relieved
Un
planned Capital
they will be
simply in
profits of
-
:

5, Nature asset Finance Act 2023

of
.

Gold Land , ,
Shares >
-
Investment assets >
-
> 6 April 2023 to 5
April 2024 (23/24)
Capital
-

Paper ,
cloth ,
mobile ,
bricks > Trade
-

These
badges of trade considerable
factors,
·

are

they are not conclusive

factors .
 Capital Allowances (2-4 marks) Parent Company them asset done two exceed
having a common
controlling are over
year
50 %
of
the

valueof assetthenit willnotbetreaton

tax considered related business 50% +
-

Capital allowances are allowable depreciation .

as .

Shareholding
Tax In unincorporated individual
department do not allow normal
accounting case
of
business
if
-

an

and
depreciation allowed they regarded Capital
then allowance
as an
expense
. owns
multiple business will be in allowance
working yearly
related is it.
Capital allowance available plant2 machinery business Their activity O they will be claimed
If
-
is on as same on

helps business to its trade If individual asset and it

which
function for share
premises purchases
a . same . -
an an uses

allowed AIA used and and

Capital first against
SRP
partially asset
allowance is is assets business
an expense in
purchase of
in uses
remaining
-
-

then used
trading PEL
of
a business. it is
against purchase of
MP .
assets
partially for private use then
for Capital allowance

-
For Capital allowance
purpose
assets are divided in -

If a business
purchases a car then rates
of purpose that asset will be
classified in a

two heads : allowance are :

separate pool. Asset will be
depreciated by normal

/General Pool Purchase

hag
to

Car
Pool

Electric
I Main 18 % 100 % allowance amount however amount
shifted allowance

serocagewion see
>
-
-

allowance
Special Rate Pool 6% column will be business .
2) >
of
use
portion only
-

Pool/General Pool Capital Purchase Main Pool AIA used Private asset at last
includes will be
against
-
Main all allowance - -
use

eligible assets except those which are

specifically as in
private use asset amount
shifted to allowance

Pool. Rate
classified in
Special Rate
of
allowance
for
-
Car
having
CO2 emission
of
less main column is
prorated .

18 %
Pool
Main 4001 is
for
12
a months
period than 50
grams Concept of private is
only for
individuals
·
.
use .

Companiese
CO2 special

do
Rate includes assets Cars
Special pool having
Cannot Privation it anasseisa
following of
emission

use
-
: -

more
E

Ratepool-
than 50
1,
Heating and
Lighting systems grams
2) Cooling systems
If removed
3 Thermal insulations an asset is
disposed then it
except Cars
Through SLA election that asset will
-

is .

and
4) Cars
having CO2 emission rate
of more
from pool at lower
of
be
depooled will be snown in a
separate
than 50 per kilometre Cost allowances claimed
grams
column
Capital will be in normal
-

5)
Lifts & Escalators Disposal Proceed manner
according to nature
of asset.
Only difference
-

IF its
6)
long life assets which have
life of balance in
any pool falls below El 000 is that when this asset will be sold
-

E100 000 to be
then whole
shifted Balancing adjustment immediately
value be will available
yearsOR and OR
25 more ,
will allowance as

them l 2 months This is called balance its down

spent column small allowance
separately
more is on in a .
. written value was available in

If
period. an
accounting period is
differentlimits
from will
months 12 its pool
-
.

Asset
For assets 6% then rates allowance AIA be will
separate pool
for of
SRP rate allowance is & SLA remain
of
-
-
a in
-
,

R2months .
period pro-rated Purchase XXX
for 4years After . 8 written down
~
.

For If (xxx)
asset
before
allowance
Capital purchase for business asset
Elmillion Allowance
purpose allowance an
not
allowances
if
is

of
is
-

an an
-
-

Tax
of trading activity then for Capital
start allowance written sold then asset will to
shift
availableagainst purchase
Xxx

OfNEW Plantsonce
is
down value
purpose it will be treated purchased (TWDU) its respective pool at its
first
as
machinery on
-
- -

This (xxx)
pretrading period allowed
called lower
Investment Disposal of I Cost
(AIA)
day of
is as Annual allowance. business. is
- -

t TWDU .

purchase Cars to start business

against
.
available

malyyearsPrior expenses
AIA
ot
is
of of considered
-

In order avoid tax Balaning Xxx(xxx) >

Balancing Charge Deducted in
to avoidance by claiming multiple a
>
-

-
are as revenue
-

allowed Adjustment Capital allowance .

AIA
,
tax department only allow OE AIA
for all expenditure and
they are treated as a normal

related business. All Companies within a

group expense. However if repair expenses on a
particular > Balancing Allowance -
Added in Capital allowance
 If asset sold & Seller to
When a business
purchases
an asset whose an
eligible for Capital allowance is
apply Buyer both have submit
-

Successive
value declines at a
fast pace
and a then
forCGT Capital Gain tax
if gain purpose ,
will arise
Transfer election.

knows that then loss Connected include

Companies control ,
business disposal will
payable However if parties
be will under common
Balancing
on a . arise -

to then loss Capital allowance Parents Grand Parents children Grand Children
allowancewillarise ,AND DosinessPlanslis
be
relief will givenallowed spouse,
no as ,
, , ,

was
already provided as an
expense .
Siblings & Business partner .

asset If low tax

of Capital
is
beneficial Disposal allowance
eligible an individual has
very income in a
-

year
used that wasted
,
AIA
following
his allowance
getting
is
- is in manner
W
such
personal
CGT
SRP Capital allowance adjustment adjustment then that individual can elect to
disapply written

2 Main Pool Pool DP XXX down allowance in that so That Capital allowance

(xxx)
year ,

Cost
3) SLA Balance
gets
.
reduced This will
trading incomes
-
XXX increase

(xxx) <xX/(xxx)
Put use asset Disposal -
lower
of gain/loss therefore wastage of personal allowance can be reduced
.
-

If Cost I ↓
Personal carried
forward
business Environment asset be
allowance cannot however
friendly
-

a
purchases On
gain
-

loss
(Green Assets)
Cetwill
DP
then 100 % first allowance will
relif balance Capital allowance
pool be relieda
-

can
year
on
,

be available
.
Balancing allowance/charge xxx/(***) in
future years
even
if not claimed in current
year
.

(SBA)
of Super
A
-

concept allowance is available

for Structure
Building Allowance

In ceased
Companies on
purchase of
New
plant
&
machinery
-

a
year
when business is
being in that -
SBA is available on commercial
building structures

acquired to not claimed trade

. However
except Cars
,
between 1
April 2021
year Capital allowance are in normal
purchased by a business
for use in its

In that claimed
, SBA
3) March 2023
.
Super allowance Bo %
was
for .
manner
year
AIA & WDA are not is
only
available on commercial
building structures

at time Ceasation simply constructed October For

pool asset and 50 % assets rather closing balance is

after 29
for
main SRP .
2018
.
of which are

to
On ERP asset
if super allowance is claimed
shifted allowance column
. ATX exam
purpose SBA is available on structures
-

then in Pool constructed

on
remaining value
going pool will
after
1 April 2020
.

Rate .
period It
notgetwrittendownallowance inthat yeara first
balance 3%
Opening xxx
of
SBA is
forand
a months is
·
-

Purchase Asset claimed 33 months

for
XXY
of years
-
.

then (***) allowed

Disposal from trading .
allowance
and claim
super on 50 %
of
- -
lower
of
: -
SBA is also an expense PEL

remaining value .
-
cost - SBA is
separate from Capital allowance as
Capital
DP
When asset super allowance allowance is available
plant 3 machinery whereas
-

which on
-

an on was

claimed is
being disposed then a
balancing charge Closing balance xxx >
-
Allowance >
-

Balancing Adjustment .
SBA is available on commercial
building structures

will arise at lower -Cost & DP in (wall Bridge tunnels warehouse structure)
of
, , , .

sold SBA
case
of
Main pool asset AND in case
of
When a business is then
normally for Capital No AIA concept in
-
.
-

it will lower individual and

SRP asset be
of
50 %
of
cost & allowance
purpose disposal adjustment is done for SBA is available
for
business also
-

0%
5
of
DP
. each
of
the Calcital allowance adjustment in Capital forCompanies O

In & In this trading

allowance at
Cost portion
SRP asset amount lower SBA available
only
will DP
of
case be is use
·

remaining of
.
case
-
on

adjusted in Special Rate Pool .

Balancing adjustment will arise

.

of
business.

In SRP asset However disposal business between Connected If trading started during then
case
if superbecause
allowance
if of
in

of year
-
was - =>

use a

SBA
not claimed on 50 % value
,
grea
ter parities then assets will be
transferred for Capital will be provated
·

land and
AIA was claimed Then
Balancing charge disposal allowance purpose at their Tax written down value SBA is not available on value
of
-

on on

will also be proportionated to lesser value than 50 %. No

Balancing adjustment will arise
. For this treatment to value of
furniture installed in building.
 If land and
a
building is
purchased with
furniture
-

and
then
for
SBA
purpose Mu
of
Land
furniture
will be deducted while calculating SBA .

If Building sold
before
33
is
completion of years
-

will be
2 4 months then
remaining period SBA

claimed
by subsequent purchaser .

If any improvement done

building structure
-
is on

then SBA will also be available that

on
improvement
value
.

If structure claimed
building SBA
-
on which is

is
disposed then total SBA is claimed is reversed

in CGi. It is added
along with disposal proceed
calculation Chl
-

while
of
.

Disposal Proceed XXX

Total SBA Claimed XXx

-

NV
-
Cost (xxx)
(loss xxx((xxx)
gainclaimed
-
SBA is in
trading PEL as an

allowed expense.
However disposal it is
adjusted in CGT
-

on
.
 Practice Question: AIA
Practice Question:
H
00015
- :

Practice Question:
O
⑳
,

Mr. A made following transactions during the year:

- >
- ⑦I
- - Mr. A made following transactions during a 15 months period:
- >
- - ⑳ 0 000 - =° O
Mr. A made following transactions during a
v
18 months period: @ ⑫°
- -
- -

Purchase of Asset Purchase of Asset -

,

-
Purchase of Asset
Plant -
670,000 Air conditioning System SRP 525,000 Heating System SRP 400,000
-
>
- -
se
-
- °
-
- -
°
= -

Car having CO2 rate of 70 gram per kilometer 40,000

> - - - - -
-
-
-
- =
Car having CO2 rate ofO
30 gram per kilometer 20,000 - => - Car having CO2 rate ofO
80 gram per kilometer 40,000
-
>
- >
- >
-
- - -
-
>
- -

Car having CO2 rate of 25 gram per kilometer 35,000

=> => -°
-
= - - -
- Car having CO2 rate of O
>
-
125 gram per 25,000
-
-
-
-
- - Car having CO2 rate of 15 gram per kilometer 17,000
kilometer
- >
-
SE
-
-

P
-
- -
-
e

New Car having zero CO2 emission 20,000

-
-
=° - -
-
-
--

New Car having CO2 rate of⑥

zero CO2 27,000
O
>
-

Used Car having zero CO2 emission 36,000

②
= &
- - => =
-

Lifts
-
-
SRP &
500,000 - -
>
-
-
-
emission
-

Escalation System -
SRP -
300,000 ②
Plant
-
470,000 Plant -
neP - 300,000 ↑

>
- = =>

②
-

Machinery 390,000 Machinery MP 450,000

Machinery 450,000
=>
-
-
>
-

- -
=° >
-

He disposed of a Plant for 70,000 (cost 45,000). Opening balance in

-
= - >
-
- = °@
°
Thermal Insulation
-
>
-
~
SRP 330,000
- Thermal Insulation SRP 270,000 - -

-
- &

Main Pool was 250,000 and 120,000 in SRP. He disposed of a Plant for 30,000 (cost 60,000). Opening balance in Main
-

Compute Capital Allowance.

-- >
- -

x
=
-
- -
-
°
-
> >
- - He disposed of a Plant for 37,000 (cost 20,000). Opening balance in Main
>
-
-
--
-

Pool was 45,000 and 30,000 in SRP.

=
- >
- >
- -
= > =>
- -
- - -

- >
- pool was 49,000 and 24,000 in SRP >
- -

Compute Capital Allowance.

- -

Compute Capital Allowance.

- - -

Capital allowance Main Pool SRP Allowance Capital allowance Main Pool SRP Allowance Capital Allowance main Pool SRP Allowance
49 000
Opening balance 250 000 120 000
Opening balance 45 000 30 000
Opening balance 24 000 >
>
-
- >
-

, , ,
· , ,
,

Purchase Purchase Cars Carl 30 20 Purchase Cars-Carl 80 40 000

of
Cars
grams
, 000
grams of
-

Carlo
>
- =°
-
-
: =
- -
,

TO 40 000 Car2 125 25 ,000 Car2 15 17 000

grams
-

grams
- ②
- °@
°

grams
- >
-
-
-
=
, ,

Car2 25 35 000 >

- >
Used Car 0 CO2 36 °
⑦

Car 3 New Car &

-

27 000
grams
>
-

000
>
-
- - -
,
-
, : ,

O CO2 emission
Car3 New Car & 0 CO2
20 000 Purchase SRP assets Purchase SRP assets
Of of
- -

emis
- -
- , -

Purchase AC 525 400 000

of
SRP assets
system ,000
Heating system
· ·
- :
,

Thermal Insulation
Lift Thermal insulation
- 500 000 ,
-
: 330 000 ,
-
270 000 ,

-
Escalator 300 ,
000 855 000 ,
-

AIA
1
000
, .
000
x 18 = 1 500000
, , (670000) ,
670 ,
000

800 ,
000 AIA
-
000 x
=
15
1250000
(855,000) ,
-

° -
855 ,
000
>
- >
=
=>

AIA (800, 000) 800 000 Purchase MP assets

of
-
- => *
-
-

>
-
-

Purchase Main Pool assets Plant 300 000

of
-
,

Purchase MP assets Plant 470 000

Machinery 450 000
of
- - -
,
,

(750 0 750 00
670
Plant 670 000 390 000 AIA
Machinery 1 500 000
000
- -
- - : ,
,
.
: , ,
, ,

Machinery 450 000 ,

-

AIA : 1250
.000 -
855 000 ,
:
(395, 000) >
-
-
395 ,
000

1 120 000
, ,
465 ,
000 465 000 ,
- - => >

ASA (200 000 20

Disposal lower Cost 60 000 (30
,000
Disposal lower
of-Cost
-
(20 000
of
-

, 0, 000 -
= : =
,
-
- 20 000 ,
,

920 000 ,
920 000 , DP : 30 000 ,
-

DP 37 000 ,

lower 536 000 55 46 64 000

Disposal of
: 000 000
-
-
, , , ,

-
Cost = 45 000 ,
v (45 000) ,
-

Written Down allowance -

Written Down allowance

-

DP : 70 000
,
~

main Pool : x 15m : 22 5 % .

(120 60 ,
120 600
,
·
Main Pool. x 18 = 27 % (12 420)
,
12
,420

1760 000 ,
160 000 ,
·
SRP :
An x 15m : %
7 5 .
(4125) 4/25 -

SRP :
x 18 % = 9 % (5760) 5760

Written down allowance # .

(20880 ,
6% (9600) 208 800 , 4/5 400
,
50 875
.
1374,725
S
33 580
, 58 240 ,
1 465, 180
,

9600

951 ,
200 150 400 ,
1 , 238 400 ,
Practice Question: Illustration 1: Capital allowances
Mr. A made following transactions during the year:
-
>
- - - 1. Happy Ltd has an accounting reference date of 31 March. The TWDV as at 1 April
- °
>
- E - -
②- =>

Purchase of Asset 2023 is £100,000 for the main pool and £50,000 on the special rate pool.

-
-

②
> >
- -

During the year ended 31 March 2024, Happy Ltd sold:

Car having CO2 emission rate 40 grams per kilometer 40,000
O ⑭ deduction >
=x
⑫ Ex
-
- >
- =
> =
-
-
- -
-
-
• Machinery for £30,000. The 130% super had been claimed on this purchase.
②O
>
-
-
> -
-
-
- -
° - -
⑤
=
- -

Plant
-
600,000
-
-
• Equipment for £70,000. The 50% first year allowance had been claimed on this
-
->
- -
-= - -

②
x
=
>
- &

② purchase.
-

SRI >
Lifts 350,000
·
- -

The sales proceeds for both disposals were for less than their original cost. Required
-
-
-

⑰
- >

Car having CO2 emission rate of 115 grams per 40,000 - -

- -
>
- -
>
-
>
-
&
- ⑩@
-

-
a E
-

kilometer (30% private use)

-
>
-
Explain the capital allowances in relation to the two disposals.
- -
-
>
=
- °

②
°
#

Machinery (20% private use)

-
120,000
=
-> 2. Charmed Ltd has an accounting reference date of 31 March and has a TWDV on its
-
-
-
-
-
----
---
-
- -
- - -

special rate pool as at 1 April 2023 of £400,000.

-

He disposed of a Plant for 80,000 (cost 12,000). Opening balance in

-
-- - >
-
- - >
-
-

>
- >
-
-

Main pool was 98,000 and 45,000 in SRP

-
- - -

During the year ended 31 March 2024, Charmed Ltd sold equipment for £300,000. This
-
-

>
- -
-- -
--

Compute Capital Allowance.

P C
- >
-

-R
- - >
-

>
-
- -
equipment was originally
>
- -
purchased for £1,250,000, with Charmed Ltd claiming the - -

O
-

AIA on £1,000,000 with a 50% FYA on the remaining £250,000.

>
-

Capital allowance Main Pool SRP Car 3 ut use

.

machine ⑳%
20
-C
- put Use Allowance
Required
-
-

Opening balance 98 000 45 000 >

-

Explain the capital allowances in relation to the disposal.

>
- >
-
-

,
,

Purchase Cars Carl 40 40 000

of
=

grams
- : >
#
- =
° @
°
,

40 000
Car2 115
grams Happy Ltd
. Capital allowance Main Pool Special Rate Pool Allowance
O >
- => °
· -
= ,

Purchase SRP assets balance 50 000

of
100 000
opening
&
-
-
,
,

Lift 350 ,
000 -

Disposal
-

Machinery (Super allowance (30 C

,
000

was claimed)
·
AIA -

(350 000 ,
>
- @
°
-
-
=>
350 000 ,
main Pool asset . >/
-

> lower Cost

of
=°
-
=> >
- E - -
=

Purchase Main Pool asset DP 30 000

of
-
=
,

Plant 600 000

Equipment (Super allowance
-
-

was claimed)
AlA (600 000 600 000
->
-
°

,
-
>
-
- -

> SRP asset > 50 %

,

lower
of
>
>
- - >
-
=>

:
>
-
-

Purchase Put-use asset I , Cost

of
·

-
Machine 120 000 , 2) DP = 70 000
,

-
AIA 150000) , x80%
=
- -
-
>
-
40 ,
000 -
70 , 000 x 50 % (35 000)
,
(35, 000)
70 ,
000 - =x
=
°
②

70 000,
-
100 000 ,
15 000
,

Disposal-lower of -Cost : 12
, 000 (12 000 ,
-
=
*
>
-

Written Down allowance 18/ (18 00 ,

6% (900) 18 000
,

-
DP : 80 000
,
900
-

00
126 000
,
45 000 ,
40 000 ,
70 000,
82 000 ,
14 100
,

Written Down allowance # (22 68 ,

& (2700) 6. (2400) 70
.
% 18% (12 600) , Be% 22 680
,

2700
BalancingCharge .

1680

10,080

103 320 42 300 37 600 57 400

, , , ,
10
40
 Charmed Ltd -

Capital allowance Special Rate Pool Allowance

400 000

OpeniKalngancelower of
>
-

Dis
00 %: 1 , 000 000 ,
(240e.
-

DP : 300 ,
000 x 80 % :
240 000 ,

lower
-

Super allowance =

of
-
Cost = 1250 000 X20%:
,
250 000 ,

W
~

DP : 300 , 000 X 20 %: 60 ,
000

>
-

60 000,
x
20% = 30 000
,
(30 000) ,
(30 000) ,

130 000 ,

written Down allowance 6% (7 800)

,
7 800
,

(22 200) ,

↓
Balancing
-

Proportion on which
super allowance was claimed : harge
250 000 ,
y 100 :
2
1250 000 ,
 d
Taxation Business
of Partnership >
-

AsperUK Taxrules ,Partnership entity itea

-

Rod's partnership the ended

for
wi share in
> - - -
C

year
its
profits
on . >
- -
31 March 2024

Rather
-
Partnership entity will distribute its
-

==
-

=
-
-

4 months
(47 000) (15 667)
tax
adjusted trading profit amoung partners 1 12 2023 313 2024 + 4
-

- - - - - - - .
.
.
T :
.
,

-
- - -

their then
agreement
12
as
per ,
and each
partner °

will his
respective income taxa NIC
. Partner's Salary Abe 4 (6 66 7)
pay
own
>
- -
20 000 x =

-
=
-
-
, ,

12
- - - - -

partner's
=°

includes
>
-

-
Each share can

⑳
&

1 Partner's (6 667)
Salary this becomes Bob 20 000 4
- - -
x
°
⑦
:
all
of
=
- ,

>
- ,

- - - - - - -

Interest trading
°

12
2. on
Capital income
for
- -
-

Residual loss (29 000

3, Share in Residual
Profit a
partner. ,

Rod's share :
(29 000) , x 1 :
(9(67)
-
A
partner has to
pay income tax3 NIC on 3

Year ended Rod (9 667)

of projit
his share .
-
31 March 2024 : :
,

Partner's Salary allowed Rod's the ended

expense share
partnership for
is
not
-

an
year
in

for firm Rather it distribution 3) March 2025

profit
. is a . -
- -

(50 000)
- - - -

Firm's ended
- - - - -

loss the 31 March

for
2025 :
year
- ,

- - - -

Each partner will asses his months Partner Salaries (20 000
of Abe
-
own - - # -
·
,

②
-

(20 000-
>
-

----②
- - - -
-

business
-
tax Bob
->
-

in their own return

.
-

-
- - -

--
- >
-

Residual loss (90 000 ,

-
- - - - -

>
- - - >
- - - - -

In PEL Rod's Share ended 31 March

trading business
income has in 2025: :

f
~

a
year
-
°
⑦ => - - - - >
-
--

90
000)
car lease rental
-

taken a on
3
then >
-
T
⑦°
⑦
-
,
x1 = 13000
becomes allowed
-
-

expense
-

an
expense .
>
- -
-

However Car
that has CO2 emission
if
- => -

50 OR then 15 %
of rentalq
more
o
rams

the Cost is a disallowed expense .

~ E
°
- -
-- - => -
= -
>

-
>
-
- - -
 -

- - -

--
>
- -
C °
⑦
#

---
°
- - - - >
-

E -
°}
⑩
⑦ - - - - -

=>
- - - -

- >
x
- - - - - - -
-

>
-
- - -

° & -

- ° - -

°
② e xc
=
° - -

⑳ _<°
⑫ - - -

=
⑥@

#i If Laurie is an
employee
In this
get salary of
Laurie will
- -
-
· case a

E12
employment.
000 which will become his
,

-------
-x -

He
- - - - - - - -

=°
-
For
in this
willnot in

share inlos sole a trad

- - -

-- -
-

- -
- - -
②
-
-

will 20 000 +
be ,
E12 000
,
: 00

- - -- -
-
- - -
->
-

-
- -
-
=>

If Laurie Partner
②
° - - - - - -
- -
is a
-
- - -

In
get
this case Laurie will share
of
-

-------
-
- - -

° - -

trading loss
of
E20 000, x 25 %: E5
, 000.

loss
Meg will have share
trading of
-

E20 000,
x 75% %: [15,
of
000
 -
-

--- --
-
Ipartnership t allowed
expense -Distribution ofProfit for
the
period endig
the
firm
wil
ePEL
e
-
an
- - -
-

their interest cost

②°
⑦ -

from trading against

the Amy Bx

E -=
-
- -

- -
- -

they are
paying
to Bex as This loan -

Profit of
Interest
the
firm for
16 months : E255,000

(t750)
beingusedintheirtradis Ex
is -

cense

r (4 000)
2025
firm
will
Capital E5 000
allowance x 80 %
·
- - -
, ,

allowed x9/1
- - - - - - -

220 - 250 250

>

claim
expense
of
an ,
000 x 5% .

-
& -
-

#750 Partner's Salary

&1
months
-m
=
- - - - - = -
·

(40 000)
-

Bex 40 000
--

E30 000
- -

-
= , x 16 , ,

·
- -
°
-

For Bex interest received 1

from the will

firmtaxed
- - - - - -

O
-

>
- - - --- ② >
-
>
-

become interest Residual ↓210

It
Profit
- >
- - - -
an income . will be ,
250
-

- - - -

Saving
>
-

head
. e Distribution 157687
-

in
Amy x 3

Eo , years
income n
-
: = 210 250,

-
- - - - - -

- - - - - - -

interest income will be 4

-
=
t667 Bex = 210 250 , x / 52 562
- -
,

4
-- =E>
-

- &
>
-

# S Further bank 68792 562

from
Bex himself took loan 157
-

-
as . ,
-

and he loar E25

=>

-
-
-
->
-
-
O
- - - -

->
-
- - -
- is
using of ,
000

for
will to
Qualifying
he be able claim
-°>
-
- - - - - - -

purpose,
Qualifying reliefusedagainst
-

- e
- - - - - - -
Loan interest expense
This to
-
total
°
⑩
N - -
-O -

loan
being
income . is

②
- >
- -
> - - °
-

further
lend to Partnership and to
° -

porchase
equipment for Partnership business These . both are

Qualifying purpose In tax

year 201125 allowed
.
,

Bey will
expense for
be :

·
E20 ,
000 x 5% x 8/12 =
6 667,

E5 , 000 x 5% x 80% x 8/12 = 133

-
° 6 800
-----
°
- -
-
= >
- =° & @
-
.
°
⑦ -

This willbeallowed
°
- -
- -
- >
- -

a
expense again
-

=
⑫
°
-
& -
- =
>
-

-
②
-
>
- - - - - -
= -

- E
=> -