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,SMART NOTES FOR ACCA F6
(TAXATION)
CONTENTS
Chapter 1 UK tax system
Chapter 2 Income tax computation
Chapter 3 Property & Investment income
Chapter 4 Employment income
Chapter 5 Income from self-employment
Chapter 6 Capital allowances
Chapter 7 Basis period
Chapter 8 Trading losses
Chapter 9 Partnership
Chapter 10 Pension & National Insurance Contribution
Chapter 11 Capital gain tax
Chapter 12 Inheritance tax
Chapter 13 Corporation tax and Group’s aspects for companies
Chapter 14 Value added tax (VAT)
,0
, ACCA F6 (TAXATION)
CHAPTER 1
UK TAX SYSTEM
1 PURPOSE OF TAXATION
1.1ECONOMIC FACTORS
• Spending by the government and the system of taxation impacts on the economy of a country.
• Taxation policies have been used to influence economic factors such as employment levels, inflation and
imports/exports
• Taxation policies are also used to direct economic behaviors of individuals and businesses. For example, they
encourage individual saving habits (Individual Savings Accounts), and giving to charity (Gift Aid Scheme).
• Further they may discourage motoring (fuel duties), smoking & alcohol (duties and taxes) and environmental
pollution (landfill tax).
• As government objectives change, taxation policies may be altered accordingly.
1.2 SOCIAL JUSTICE
The taxation system accumulates and redistributes wealth within a country.
2 STRUCTURE OF THE UK TAX SYSTEM
The structure of the UK tax system can be shown as follows:
Structure Role and responsibility
Chancellor of the The Chancellor has the overall responsibility for the UK tax system and one of his roles
Exchequer includes producing the Budget each year.
Treasury The Treasury is the ministry responsible under the Chancellor for the imposition and
collection of taxation.
Commissioners The Treasury appoint permanent civil servants, the Commissioners for HMRC.
Their duties include:
– Administering the UK tax system
– Implementing tax law.
HMRC HM Revenue and Customs (HMRC) is a single body that controls and administers all areas
of UK tax law.
The structure of HM Revenue and Customs can be shown as follows:
➢
District offices
The Commissioners appoint Officers of HMRC to carry out the day-to-day work of
managing the tax system. Their roles include:
• Issuing tax returns
• Examining tax returns and accounts
• Calculating tax liabilities under the self-assessment tax systems and PAYE.
➢
Accounts and payments offices
Accounts and payments offices deal with the collection and payment of tax.
3 PRINCIPLES OF TAXATION
Different taxes have different social effects.
Progressive taxation: As income rises the proportion of taxation raised also rises, for example UK income tax
Regressive taxation: As income raises the proportion of taxation paid falls, for example, tax on cigarettes is the same
regardless of the level of income of the purchaser, so as income rises it represents a lower proportion of income.
Proportional taxation: As income rises the proportion of tax remains constant.
Ad Valorem principle: A tax calculated as a percentage of the value of the item, for example Value Added Tax
1 )
m/accastudymate
rialonlineclass
,SMART NOTES FOR ACCA F6
(TAXATION)
CONTENTS
Chapter 1 UK tax system
Chapter 2 Income tax computation
Chapter 3 Property & Investment income
Chapter 4 Employment income
Chapter 5 Income from self-employment
Chapter 6 Capital allowances
Chapter 7 Basis period
Chapter 8 Trading losses
Chapter 9 Partnership
Chapter 10 Pension & National Insurance Contribution
Chapter 11 Capital gain tax
Chapter 12 Inheritance tax
Chapter 13 Corporation tax and Group’s aspects for companies
Chapter 14 Value added tax (VAT)
,0
, ACCA F6 (TAXATION)
CHAPTER 1
UK TAX SYSTEM
1 PURPOSE OF TAXATION
1.1ECONOMIC FACTORS
• Spending by the government and the system of taxation impacts on the economy of a country.
• Taxation policies have been used to influence economic factors such as employment levels, inflation and
imports/exports
• Taxation policies are also used to direct economic behaviors of individuals and businesses. For example, they
encourage individual saving habits (Individual Savings Accounts), and giving to charity (Gift Aid Scheme).
• Further they may discourage motoring (fuel duties), smoking & alcohol (duties and taxes) and environmental
pollution (landfill tax).
• As government objectives change, taxation policies may be altered accordingly.
1.2 SOCIAL JUSTICE
The taxation system accumulates and redistributes wealth within a country.
2 STRUCTURE OF THE UK TAX SYSTEM
The structure of the UK tax system can be shown as follows:
Structure Role and responsibility
Chancellor of the The Chancellor has the overall responsibility for the UK tax system and one of his roles
Exchequer includes producing the Budget each year.
Treasury The Treasury is the ministry responsible under the Chancellor for the imposition and
collection of taxation.
Commissioners The Treasury appoint permanent civil servants, the Commissioners for HMRC.
Their duties include:
– Administering the UK tax system
– Implementing tax law.
HMRC HM Revenue and Customs (HMRC) is a single body that controls and administers all areas
of UK tax law.
The structure of HM Revenue and Customs can be shown as follows:
➢
District offices
The Commissioners appoint Officers of HMRC to carry out the day-to-day work of
managing the tax system. Their roles include:
• Issuing tax returns
• Examining tax returns and accounts
• Calculating tax liabilities under the self-assessment tax systems and PAYE.
➢
Accounts and payments offices
Accounts and payments offices deal with the collection and payment of tax.
3 PRINCIPLES OF TAXATION
Different taxes have different social effects.
Progressive taxation: As income rises the proportion of taxation raised also rises, for example UK income tax
Regressive taxation: As income raises the proportion of taxation paid falls, for example, tax on cigarettes is the same
regardless of the level of income of the purchaser, so as income rises it represents a lower proportion of income.
Proportional taxation: As income rises the proportion of tax remains constant.
Ad Valorem principle: A tax calculated as a percentage of the value of the item, for example Value Added Tax
1 )
