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Chapter 26
TAX PLANNING STYLE QUESTIONS
1. Introduction
The TX-UK examining team have stated that they are attempting to “bridge the gap” between TX-UK
and ATX and have therefore introduced some “new style” questions to the exams that attempts to
recognise this goal.
One style is the introduction of multi tax questions where a scenario that involves more than one tax
is tested rather than the traditional single tax computational problems of the past. Where this
happens, however, the requirements are very specific to each tax issue being tested and you will be
left in no doubt as to what the examiner is asking you to do.
For example when in lifetime a taxpayer gifts an asset to another person, you may be required to
explain and compute both the CGT and IHT implications that may arise out of that transfer.
A further change away from the traditional “prepare the tax computation” style has been the
requirement to give planning advice to the taxpayer. Don’t worry as again you will not be given a
requirement such as – Advise (15 marks), but will be led through the question by individual
requirements.
For example in advising whether or not a trader would be better o
ff
running their business as an
unincorporated trade or as an incorporated trade, the question will ask you to compute the tax
liabilities that will attach to each option based on a specific level of adjusted trading profit and profit
extraction from that business. This will again involve a multi tax approach.
The introduction of both savings income and dividend income nil rate bands has made the question
over the transferability of income producing assets from one spouse or civil partner to another a
more interesting problem as compared to the main issue before this introduction of simply moving
income producing assets from a higher rate taxpayer to a basic rate taxpayer or even from a basic or
higher rate taxpayer to a spouse / civil partner who has not fully used their personal allowance.
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