This module is primarily concerned with the calculation of Capital Gains Tax (CGT) and Corporation Tax (CT) liabilities. It also builds on and develops the Income Tax (IT) and Value Added Tax (VAT) topics covered in the Taxation 1 module in Year 3 of the programme. Emphasis is placed on considering all of the tax implications (i.e., IT, CT, CGT and VAT) of any given scenario and on choosing the most tax efficient course of action from a number of alternatives.
Income Tax and Value Added Tax (VAT)
- Income Tax: Review of Year 3 Taxation 1 module and updating for most recent Finance Act, where necessary.
- VAT: Review of Year 3 Taxation 1 module and updating for most recent Finance Act, where necessary.
Capital Gains Tax (CGT)
- The territorial scope of CGT
- Basic principles of computing gains and losses
- Basic reliefs and exemptions
- Gains and losses on the disposal of development land and other immovable property
- Gains and losses on the disposal of shares and securities, including bonus issues and rights issues and the purchase by a company of its own shares
- Advanced reliefs including entrepreneurial relief rate, retirement relief, principal private residence relief and relief from CGT on incorporation
Corporation Tax (CT)
- Basis of assessment, scope and administration
- Charges on income
- Chargeable gains
- Case I calculations and revision of sole-trader provisions for adjustment of profit and calculation of capital allowances, identification of differences in calculations for a company
- Calculation of liability – application of reliefs and application of 12.5% rate and 25% rate
- CT tax loss relief including group loss relief
- Relief from CT on chargeable gains on the intra-group transfer of assets
Tax Planning
- Sole trade v. incorporation - the key tax issues affecting the choice of business medium
- Incorporation of a sole trade operation (Income Tax, CGT, CT and VAT implications), the best time to incorporate and other planning points
- Extraction of corporate profits – termination payments, tax treatment of distributions, CGT implications on disposal of a company, purchase by a company of its own shares
- Tax efficient group structures - use of holding companies, maximising use of losses, intra-group transfers of assets, VAT groups
Much of the above is merely an application of the principles learned over the course of third and fourth year. As far as possible, the tax planning concepts will be introduced at the time these principles are covered rather than as separate topic at the end of Year 4.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Formal Examination | 80 |
| Other Assessment(s) | 20 |