Institute of Financial Accountants (IFA) Qualifications Business Taxation Syllabus

Business Taxation syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Business Taxation in Institute of Financial Accountants (IFA) Qualifications, not a summary of it.

1. 1

   The UK Tax Framework

   4 topics

   • Sources and administration of UK tax
     • HMRC structure and powers
     • Statute, case law and HMRC guidance
   • Self-assessment and compliance obligations
     • Filing and payment deadlines
     • Penalties, interest and record-keeping
   • Tax avoidance, evasion and ethics
     • The distinction between avoidance and evasion
     • General Anti-Abuse Rule (GAAR)
   • Making Tax Digital obligations
2. 2

   Income Tax and National Insurance

   4 topics

   • The income tax computation
     • Personal allowance and rate bands
     • Savings and dividend income
   • Employment income and benefits in kind
     • Taxable and exempt benefits
     • PAYE operation
   • Trading income for the self-employed
     • Adjustment of profits and disallowable expenses
     • Capital allowances on plant and machinery
     • Basis periods and the tax year basis
   • National Insurance contributions for employees and the self-employed
3. 3

   Corporation Tax

   5 topics

   • Scope and chargeable accounting periods
     • Residence and the charge to tax
     • Accounting periods and long periods of account
   • Computing taxable total profits
     • Trading profits and capital allowances
     • Property and investment income
   • Chargeable gains for companies
     • Indexation and rollover relief
   • Losses and group relief
     • Carry-forward and carry-back of losses
     • Group and consortium relief
   • Payment of corporation tax and instalments
4. 4

   Value Added Tax

   4 topics

   • Registration and deregistration
     • Compulsory and voluntary registration thresholds
   • Output and input VAT
     • Standard, reduced, zero-rated and exempt supplies
     • Partial exemption and blocked input tax
   • VAT accounting and special schemes
     • Flat rate, cash and annual accounting schemes
     • The VAT return and Making Tax Digital
   • VAT records, errors and penalties
5. 5

   Capital Taxes and Reliefs

   3 topics

   • Capital gains tax for individuals
     • Annual exempt amount and rates
     • Business Asset Disposal Relief
   • Disposals of shares and chattels
   • Inheritance tax fundamentals
     • Lifetime transfers and the nil rate band
     • Exemptions and reliefs

Business Taxation flashcards for Institute of Financial Accountants (IFA) Qualifications

18 of 55 cards from the Business Taxation deck — real questions with worked answers.

1. Which body administers the UK tax system, and under whose ministerial responsibility does it operate?

   HM Revenue and Customs (HMRC) administers and collects UK taxes. It operates under the responsibility of the Treasury, headed by the Chancellor of the Exchequer.

2. List the main sources of UK tax law.

   Statute (Acts of Parliament such as the annual Finance Acts), statutory instruments, case law (court decisions interpreting the law), and HMRC guidance/extra-statutory concessions (which explain HMRC's interpretation but are not law).

3. What is the UK tax year (fiscal year) for individuals?

   It runs from 6 April in one year to 5 April in the following year (e.g. 2024/25 runs from 6 April 2024 to 5 April 2025).

4. Under Self-Assessment, what are the filing deadlines for an individual's online and paper income tax returns?

   Paper returns: 31 October following the end of the tax year. Online returns: 31 January following the end of the tax year (e.g. for 2024/25, by 31 January 2026).

5. When are an individual's income tax payments on account due, and how is each calculated?

   Two payments on account are due on 31 January (in the tax year) and 31 July (after the tax year), each equal to 50% of the prior year's income tax and Class 4 NIC liability. A balancing payment is then due by the following 31 January.

6. State the standard penalties for late filing of a Self-Assessment return.

   $£100$ immediately after the deadline; daily penalties of $£10$ per day (up to 90 days) after 3 months; the greater of $£300$ or 5% of tax due after 6 months; and a further such penalty after 12 months.

7. How long must an individual normally retain records supporting a Self-Assessment return if they are in business?

   Five years from the 31 January filing deadline (i.e. until 31 January nearly 6 years after the tax year end) for business records; non-business taxpayers keep them for one year after the deadline.

8. Distinguish tax avoidance from tax evasion.

   Tax avoidance is using legal means to reduce a tax liability (though it may be challenged if abusive). Tax evasion is illegally reducing tax by concealing income, falsifying records or providing false information, and is a criminal offence.

9. What is the GAAR in UK taxation?

   The General Anti-Abuse Rule, which allows HMRC to counteract tax advantages arising from arrangements that are 'abusive' — those that cannot reasonably be regarded as a reasonable course of action in relation to the relevant tax provisions.

10. What are the five fundamental ethical principles a tax adviser (e.g. an IFA member) must follow?

    Integrity, Objectivity, Professional competence and due care, Confidentiality, and Professional behaviour.

11. What is Making Tax Digital (MTD) and which businesses must currently comply for VAT?

    MTD requires digital record-keeping and submission of returns to HMRC using compatible software. All VAT-registered businesses must keep digital records and file VAT returns through MTD-compatible software.

12. Under MTD, what two core obligations are placed on a business?

    (1) Keep digital records of transactions in functional compatible software, and (2) submit periodic updates/returns to HMRC directly from that software using a digital link (no manual re-typing).

13. List the order in which the three types of income are taxed within the income tax computation.

    Non-savings income first, then savings income, then dividend income (the highest 'slices' on top), so that savings and dividends are taxed at the rates determined by where they fall.

14. State the standard UK personal allowance and the income level at which it begins to be withdrawn.

    The personal allowance is $£12{,}570$. It is reduced by $£1$ for every $£2$ of adjusted net income above $£100{,}000$, so it is fully withdrawn once income reaches $£125{,}140$.

15. State the UK income tax rates and bands for non-savings income (2024/25, excluding Scotland).

    Basic rate 20% on the first $£37{,}700$ of taxable income; higher rate 40% on income from $£37{,}701$ to $£125{,}140$; additional rate 45% above $£125{,}140$.

16. What is the dividend allowance and the dividend ordinary/upper/additional rates for 2024/25?

    Dividend allowance (nil-rate band) of $£500$. Dividends above it are taxed at 8.75% (basic band), 33.75% (higher band) and 39.35% (additional band).

17. How is an employee's taxable benefit of a company car generally computed?

    $$\text{Benefit} = \text{list price} \times \text{CO}_2\text{-based percentage}$$ The CO2 percentage (capped at 37%) is applied to the car's list price, reduced for any capital contribution and time the car is unavailable.

18. How is the taxable benefit on a beneficial (low-interest) employee loan calculated?

    Benefit = interest at the official rate on the loan minus interest actually paid. No benefit arises if all such loans total $£10{,}000$ or less throughout the tax year.

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