Taxation United Kingdom (TX-UK)

Taxation – United Kingdom (TX-UK)8. Introduction to the syllabusThe aim of the syllabus is to develop knowledge and skills relating to the tax system asapplicable to individuals, single companies, and groups of companies.The syllabus for Taxation - United Kingdom (TX-UK) introduces candidates to the subject oftaxation and provides the core knowledge of the underlying principles and major technicalareas of taxation as they affect the activities of individuals and businesses.Candidates are introduced to the rationale behind – and the functions of – the tax system.The syllabus then considers the separate taxes that an accountant would need to have adetailed knowledge of, such as income tax from self-employment, employment andinvestments, the corporation tax liability of individual companies and groups of companies,the national insurance contribution liabilities of both employed and self-employed persons,the value added tax liability of businesses, the chargeable gains arising on disposals ofinvestments by both individuals and companies, and the inheritance tax liabilities arising onchargeable lifetime transfers and on death.Having covered the core areas of the basic taxes, candidates should be able to compute taxliabilities, explain the basis of their calculations, apply tax planning techniques for individualsand companies and identify the compliance issues for each major tax through a variety ofbusiness and personal scenarios and situations.Section G of the syllabus contains outcomes relating to the demonstration of appropriatedigital and employability skills in preparing for and taking the examination. This includesbeing able to interact with different question item types, manage information presented indigital format and being able to use the relevant functionality and technology to prepare andpresent response options in a professional manner. These skills are specifically developedby practicing and preparing for the exam, using the learning support content for computerbased exams available via the practice platform and the ACCA website and will need to bedemonstrated during the live exam. ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)9. Main capabilitiesOn successful completion of this exam, candidates should be able to:ABCDEFGExplain the operation and scope of the tax system and the obligations of tax payersand/or their agents and the implications of non-complianceExplain and compute the income tax liabilities of individuals and the effect of nationalinsurance contributions (NIC) on employees, employers and the self-employedExplain and compute the chargeable gains arising on individualsExplain and compute the inheritance tax liabilities of individualsExplain and compute the corporation tax liabilities of individual companies andgroups of companiesExplain and compute the effects of value added tax on incorporated andunincorporated businessesDemonstrate employability and technology skillsRelational diagram of the main capabilitiesThis diagram illustrates the flows and links between the main capabilities (sections) of thesyllabus and should be used as an aid to planning teaching and learning in a structured way. ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)10. The syllabus4. Gains and losses on the disposal ofshares and securitiesA The UK tax system and itsadministration5. The computation of capital gains tax1. The overall function and purpose oftaxation in a modern economy2. Principal sources of revenue law andpractice3. The systems for self-assessment andthe making of returns4. The time limits for the submission ofinformation, claims and payment of tax,including payments on account5. The procedures relating to compliancechecks, appeals and disputes6. The use of exemptions and reliefs indeferring and minimising tax liabilitiesarising on the disposal of capital assetsD Inheritance tax1. The basic principles of computingtransfers of value2. The liabilities arising on chargeablelifetime transfers and on the death of anindividual3. The use of exemptions in deferring andminimising inheritance tax liabilities4. Payment of inheritance tax6. Penalties for non-complianceEBCorporation tax liabilitiesIncome tax and NIC liabilities1. The scope of corporation tax1. The scope of income tax2. Taxable total profits2. Income from employment3. Chargeable gains for companies3. Income from self-employment4. Property and investment income4. The comprehensive computation ofcorporation tax liability5. The comprehensive computation oftaxable income and income tax liability5. The effect of a group corporate structurefor corporation tax purposes6. National insurance contributions foremployed and self-employed persons6. The use of exemptions and reliefs indeferring and minimising corporation taxliabilities7. The use of exemptions and reliefs indeferring and minimising income taxliabilitiesFValue added tax (VAT)1. The VAT registration requirementsC Chargeable gains for individuals2. The computation of VAT liabilities1. The scope of the taxation of capital gains2. The basic principles of computing gainsand losses3. The effect of special schemes3. Gains and losses on the disposal ofmovable and immovable property ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)G Employability and technology skills1. Use computer technology to efficientlyaccess and manipulate relevantinformation.2. Work on relevant response options,using available functions andtechnology, as would be required in theworkplace.3.Navigate windows and computerscreens to create and amend responsesto exam requirements, using theappropriate tools.4.Present data and information effectivelyusing the appropriate tools. ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)11. Detailed study guide3. The systems for self-assessment andthe making of returnsA The UK Tax system and itsadministrationa) Explain and apply the features of theself-assessment system as it applies toindividuals.[2]1. The overall function and purpose oftaxation in a modern economyb) Explain and apply the features of theself-assessment system as it applies tocompanies, including the use of iXBRL.[2]a) Describe the purpose (economic, socialetc) of taxation in a modern economy.[1]b) Explain the difference between directand indirect taxation.[2]c) Identify the different types of capital andrevenue tax.[1]2. Principal sources of revenue law andpracticea) Describe the overall structure of the UKtax system.[1]b) State the different sources of revenuelaw.[1]c) Describe the organisation HM Revenue& Customs (HMRC) and its terms ofreference.[1]d) Explain the difference between taxavoidance and tax evasion, and thepurposes of the General Anti-AbuseRule (GAAR).[1]e) Appreciate the interaction of the UK taxsystem with that of other taxjurisdictions.[2]f)4. The time limits for the submission ofinformation, claims and payment oftax, including payments on accounta) Recognise the time limits that apply tothe filing of returns and the making ofclaims.[2]b) Recognise the due dates for thepayment of tax under the selfassessment system, and computepayments on account and balancingpayments/repayments for individuals.[2]c) Explain how large companies arerequired to account for corporation taxon a quarterly basis and compute thequarterly instalment payments.[2]d) List the information and records thattaxpayers need to retain for taxpurposes.[1]Excluded topics The payment of capital gains tax byannual instalments. The calculation of payments onaccount for disposals of residentialproperty where there is more thanone residential property disposalduring a tax year. Simple assessments. Quarterly accounting by companiesfor income tax. Quarterly instalments for very largecompanies.Appreciate the need for double taxationagreements.[2]g) Explain the need for an ethical andprofessional approach.[2]Excluded topics Specific anti-avoidance legislation. ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)5. The procedures relating tocompliance checks, appeals anddisputesa) Explain the circumstances in which HMRevenue & Customs can make acompliance check into a self-assessmenttax return.[2]c) Recognise the income assessable.[2]d) Recognise the allowable deductions,including travelling expenses.[2]e) Discuss the use of the statutoryapproved mileage allowances.[2]f)b) Explain the procedures for dealing withappeals and First and Upper TierTribunals.[2]Excluded topics Information powers. Pre-return compliance checks. Detailed procedures on the carryingout and completion of a compliancecheck.Explain the PAYE system, how benefitscan be payrolled, and the purpose ofform P11D.[1]g) Explain and compute the amount ofbenefits assessable.[2]h) Recognise the circumstances in whichreal time reporting late filing penaltieswill be imposed on an employer and theamount of penalty which is charged.[2]Excluded topics The calculation of a car benefitwhere emission figures are notavailable. The calculation of a car benefitwhere the car was registered before6 April 2020. The calculation of a car benefit fornon-hybrid cars with emissions below50g/km. The reduced charge applicable tozero emission company vans. Tax free childcare scheme. Share and share option incentiveschemes for employees. Payments on the termination ofemployment, and other lump sumsreceived by employees. Optional remuneration arrangements6. Penalties for non-compliancea) Calculate late payment interest and statethe penalties that can be charged.[2]B Income tax and NIC liabilities1. The scope of income taxa) Explain how the residence of anindividual is determined.[1]Excluded topics The split year treatment where aperson comes to the UK or leavesthe UK.Foreign income, non-residents anddouble taxation relief.Income from trusts and settlements.2. Income from employmenta) Recognise the factors that determinewhether an engagement is treated asemployment or self-employment.[2]3. Income from self-employmenta) Recognise the basis of assessment forself-employment income.[2]b) Recognise the basis of assessment foremployment income.[2] ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)b) Describe and apply the badges oftrade.[2]c) Recognise the expenditure that isallowable in calculating the tax-adjustedtrading profit.[2]d) Explain and compute the assessableprofits using the cash basis for smallbusinesses.[2]e) Recognise the relief which can beobtained for pre-trading expenditure.[2]f)Compute the assessable profits oncommencement and on cessation.[2]j)Partnerships and limited liabilitypartnershipsi) Explain and compute how apartnership is assessed to tax.[2]ii) Explain and compute theassessable profits for each partnerfollowing a change in the profitsharing ratio.[2]iii) Explain and compute theassessable profits for each partnerfollowing a change in themembership of the partnership.[2]iv) Describe the alternative loss reliefclaims that are available topartners.[1]Excluded topicsg) Recognise the factors that will influencethe choice of accounting date.[2]h) Capital allowancesi) Define plant and machinery forcapital allowances purposes.[1]ii) Compute writing downallowances, first-year allowancesand the annual investmentallowance.[2]iii) Compute capital allowances formotor cars.[2]iv) Compute balancing allowancesand balancing charges.[2]v)Compute structures and buildingsallowances.[2]vi) Recognise the treatment of shortlife assets.[2]vii) Recognise the treatment of assetsincluded in the special rate pool.[2]i)Relief for trading lossesi) Understand how trading lossescan be carried forward.[2]ii) Understand how trading lossescan be claimed against total incomeand chargeable gains, and therestriction that can apply.[2]iii) Explain and compute the relieffor trading losses in the early yearsof a trade.[1]iv) Explain and compute terminalloss relief.[1]v) Recognise the factors that willinfluence the choice of loss reliefclaim.[2] Change of accounting date. Capital allowances for patents andresearch and developmentexpenditure. Apportionment in order to determinethe amount of annual investmentallowance where a period of accountspans 1 January 2021. Knowledge of the annual investmentallowance limit of 200,000applicable from 1 January 2021. Enterprise zones. Investment income of a partnership. The allocation of notional profits andlosses for a partnership. Farmers averaging of profits. The averaging of profits for authorsand creative artists. Loss relief following the incorporationof a business. Loss relief for shares in unquotedtrading companies. The loss relief restriction that appliesto the partners of a limited liabilitypartnership. ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK) Trading allowance of 1,000. Non-deductible capital expenditureunder the cash basis other thanmotor cars, land and buildings.is applicable for the purposes of thesavings income nil rate band. Property allowance of 1,000. Non-deductible capital expenditureunder the cash basis other thanmotor cars, land and buildings. The cap in respect of the propertyincome finance costs tax reducer. Carry forward of the property incomefinance costs tax reducer.4. Property and investment incomea) Compute property business profits.[2]b) Explain the treatment of furnishedholiday lettings.[1]c) Understand rent-a-room relief.[1]d) Compute the amount assessable when apremium is received for the grant of ashort lease.[2]5. The comprehensive computation oftaxable income and income taxliabilitye) Understand and apply the restriction onproperty income finance costs.[2]a) Prepare a basic income tax computationinvolving different types of income.[2]f)Understand how relief for a propertybusiness loss is given.[2]b) Calculate the amount of personalallowance available.[2]g) Compute the tax payable on savings anddividends income.[2]c) Understand the impact of thetransferable amount of personalallowance for spouses and civilpartners.[2]h) Recognise the treatment of individualsavings accounts (ISAs) and other taxexempt investments.[1]i)Understand how the accrued incomescheme applies to UK Governmentsecurities (gilts).[1]Excluded topicsd) Compute the amount of income taxpayable.[2]e) Understand the treatment of interest paidfor a qualifying purpose.[2]f)Understand the treatment of gift aiddonations and charitable giving.[1] Premiums for granting subleases. Junior ISAs.g) Explain and compute the child benefittax charge.[1] The additional ISA allowance for asurviving spouse or registered civilpartner.h) Understand the treatment of propertyowned jointly by a married couple, or bya couple in a civil partnership.[1] Help-to-buy, innovative finance andlifetime ISAs.Excluded topics Savings income paid net of tax. The detailed rules for establishingwhether higher or additional rate tax Consideration of the most beneficialallocation of the personal allowanceto different categories of income. The blind person’s allowance and themarried couple’s allowance. ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK) Tax credits. Maintenance payments. The income of minor children.approval from HM Revenue &Customs. The anti-avoidance annual allowancelimit of 4,000 for pensioncontributions (the tapering of theannual allowance down to aminimum of 4,000 is examinable). The threshold level of income belowwhich tapering of the annualallowance does not apply. The enterprise investment schemeand the seed enterprise investmentscheme. Venture capital trusts. Tax reduction scheme for gifts of preeminent objects.6. National insurance contributions foremployed and self-employed personsa) Explain and compute national insurancecontributions payable:i) Class 1 and 1A NIC.[2]ii) Class 2 and 4 NIC. [2]b) Understand the annual employmentallowance.[2]Excluded topics The calculation of directors’ nationalinsurance on a month by monthbasis. The offset of trading losses againstnon-trading income. The exemption from employer’s class1 NIC in respect of employees agedunder 21 and apprentices agedunder 25. Group aspects of the annualemployment allowance.7. The use of exemptions and reliefs indeferring and minimising income taxliabilitiesa) Explain and compute the relief given forcontributions to personal pensionschemes, and to occupational pensionschemes.[2]C Chargeable gains forindividuals1. The scope of the taxation of capitalgainsa) Describe the scope of capital gains tax.[2]b) Recognise those assets which areexempt.[1]Excluded topics Assets situated overseas and doubletaxation relief. Partnership capital gains.2. The basic principles of computinggains and lossesb) Understand how a married couple or acouple in a civil partnership can minimisetheir tax liabilities.[2]a) Compute and explain the treatment ofcapital gains.[2]c) Basic income tax planning.[2]b) Compute and explain the treatment ofcapital losses. [2]Excluded topics The conditions that must be met inorder for a pension scheme to obtainc) Understand the treatment of transfersbetween a married couple or between acouple in a civil partnership.[2] ACCA 2021-2022 All rights reserved.

Taxation – United Kingdom (TX-UK)d) Understand the amount of allowableexpenditure for a part disposal.[2]e) Recognise the treatment where an assetis damaged, lost or destroyed, and theimplications of receiving insuranceproceeds and reinvesting suchproceeds.[2]Excluded topics Assets held at 31 March 1982. Small part disposals of land, andsmall capital sums received wherean asset is damaged. Losses in the year of death. Relief for losses incurred on loansmade to traders. b) Explain and apply the identification rulesas they apply to individuals including thesame day and 30 day matching rules.[2]c) Explain and apply the poolingprovisions.[2]d) Explain and apply the treatment of bonusissues, rights issues, takeovers andreorganisations.[2]e) Identify the exemption available for giltedged securities and qualifyingcorporate bonds.[1]Excluded topics The small part disposal rulesapplicable to rights issues, takeoversand reorganisations. Gilt-edged securities and qualifyingcorporate bonds other than the factthat they are exempt.Negligible value claims.3. Gains and losses on the disposal ofmovable and immovable property5. The computation of capital gains taxa) Identify when chattels and wastingassets are exempt.[1]a) Compute the amount of capital gains taxpayable.[2]b) Compute the chargeable gain when achattel or a wasting asset is disposedof.[2]b) Explain and apply business assetdisposal relief. [2]c) Calculate the chargeable gain when aprincipal private residence is disposedof.[2]c) Explain and apply investors’ relief. [2]Excluded topics Business asset disposal relief forassociated disposals. Mixed use property. Expanded definition of the 5%shareholding condition for business

6. Relational diagram linking Taxation - United Kingdom (TX-UK) with other exams This diagram shows links between this exam and other exams preceding or following it. Some exams are directly underpinned by other exams such as Advanced Taxation - United Kingdom (ATX-UK) by Taxation - United Kingdom (TX-UK).