Tx notes fa22 Final

Non 
Savings
Dividends
Total
£
£
£
Salary
8,000
8,000
Dividends 
42,120
42,120
8,000
42,120
50,120
PA
(8,000)
(4,570)
(12,570)
Taxable Income
0
37,550
37,550
Tax Liability
Dividends
2,000 @ 0%
0
35,550 @ 7.5%
2,662
37,550
2,662

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4. Multi tax scenarios 
The examining team have made a conscious e
ff
ort to try and narrow the gap between TX-UK and 
the Advanced Taxation Paper and one area where this has occurred is in questions that test all the 
taxes that may be relevant to a transaction or event rather than just asking for one specific tax that it 
is involved, for at the Advanced Taxation level most questions involve more than one tax.
We have already seen in this chapter examples of this, a simple example of income producing assets 
being transferred between spouses or civil partners, where although the main issue is income tax it 
is important to know that there are no capital taxes (CGT & IHT) implications.
A more challenging problem was the comparison of running a business as an unincorporated trader 
or incorporated trader, where we have to deal with the Corporation Tax implications for a company 
and the personal tax issues for the individual involving therefore both Income Tax and if necessary 
NIC.
When advising a client on the tax implications of running a business, then in addition to the tax 
points made above, the trader would also want advice on VAT, initially when the business must 
register for VAT and whether it should choose to do so earlier rather than later. This may then lead to 
a discussion of the various accounting schemes that may be available and advisable to be used 
such as cash, annual or flat rate.
If a taxpayer is to start their own business then he / she may want advice on the tax implications of 
buying and expensing a car or cars through the business either for themselves and / or employees 
and the di
ff
erent outcomes dependent upon the choice of business medium – unincorporated or 
incorporated.
When a car is purchased through the business what happens to the VAT incurred thereon along with 
the VAT su
ff
ered on the running expenses. What capital allowances are available on the purchase 
cost and is tax relief available on the running expenses of the car. If a car is made available to an 
employee what is the assessable benefit to be included in their employment income assessment and 
will there be any Class 1A NIC to pay by the employer in relation to such benefits.
We noted above the tax implications of spouses or civil partners transferring assets to one another 
and saw that in terms of the capital taxes there would be no impact as for CGT purposes such 
transfers are on a no gain no loss basis and for IHT purposes the transfers are exempt. A more 
interesting problem worthy of an examination question would be, what tax implications arise when 
assets are transferred to your children, usually by gift.
In Chapter 24 on IHT, illustration 1 demonstrated the IHT implications, which we can now review and 
also bring in the CGT implications.

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