B4-5(2)-Property-income--NICs.ppt

B4.Property income lProperty business profits lPremiums received on the grant of a short leaselProperty business lossesl*Rent a room reliefl*Furnished holiday lettings1.Property business profitslRental profits/losses are computed for tax years on an accruals basis in the same way as trading profits.(except for CAs)l*Exceptions for furnished lettingsA 10%wear&tear allowance based on rent can be claimed to replace CAs.l10%（rents water rates&council tax paid by the landlord)lAll the rents and expenses for all properties are pooled to give a single profit/loss.lEX.P672.Premiums received on grant of short leaselA lump sum payment in consideration of a short lease(=50yrs)lPart of the premium is treated as rent received in the year of grant2.Premiums received on grant of short lease(Cont.)lFor the landlord:Amount assessable premium 2%x premium for each complete year of the lease (except 1st year)P (P2%(D 1)Or*P (51 D)/50(P-Premium received;D-Duration of the lease)lFor the tenant:*Premiums paid is an annual deductible expenditure in calculating the tenants trading profiti.e.Amount assessable D3.Property business losses lc/f to set off against the first available property business profits in the future4.*Rent a room relief lIf an individual lets a room or rooms,furnished,in his main residence as living accommodation,a special exemption may apply.If gross rents(before deducting expenses):a choice between actual basis(RentsExpenses)or claiming a rent a room relief(Rents4,250)lEX.P695.*Furnished holiday lettings(FHL)lConditions(refer to text)lSpecial rules(treated as a trade)CAs are available on P&M instead of the 10%wear and tear allowance.A loss from FHL can only be c/f against future profits from FHL.The profit of FHL qualifies as relevant earnings for pension relief.CGT business reliefs are available when a FHL is disposed of.Exercise 5lExam Q Bank Q8 RafeB5 National insurance contributionslScope of NICslClass1&Class1A NICslClass2&Class4 NICs1.Scope of NICslNICs for employees&employers Class1Class1Al NICs for self-employed persons Class 2&Class 42.Class1&Class1A NICs lClass1 NICspayable by employees&employersbased on an employees cash earningslClass1A NIC payable by employersbased on all taxable benefits provided to employees2.Class1&Class1A NICs(Cont.)l%lClass 1 Employee 1 7,225 per year Nil 7,226 42,475 per year 12.0 42,476 and above per year 2.0lClass 1 Employer 1 7,072 per year Nil 7,073 and above per year 13.8lClass 1A 13.8EX.Class1&Class1A NICs lSimone Ltd has one employee who is paid 50,000 per year,and was provided with the following taxable benefits during the tax year 201112:Company motor car 6,300 Car fuel 5,400 Living accommodation 1,800lShow the class 1 and class 1A NIC liabilities.EX.Answer Employee class 1 NIC42,475 7,225=35,250 at 12%4,23050,000 42,475=7,525 at 2%151 4,381Employers class 1 NIC50,000 7,072=42,928 at 13.8%5,924Employers class 1A NIC13,500(6,300+5,400+1,800)at 13.8%1,8633.Class 2&Class 4 NICslClass 2 NICsA flat rate weekly contribution 2.50 per weeklClass 4 NICsIn addition to Class 2 Based on trading profit%lClass 4 1 7,225 per year Nil 7,226 42,475 per year 9.0 42,476 and above per year 2.0lEX.P168Brief summery of Part BlOutline of income taxComputing taxable income&income tax liabilitylIncome from employmentTaxable and exempt benefitsPensionslIncome from self-employmentComputing trading income,Capital Allowances Assessable trading income,Trading losses,PartnershipslProperty incomelNICslExam Q Ref.Q27 Lai(a)