ICPA Analysis: Tales from The ICPA Telephone Helplines
Tales from the telephones
ICPA’s helpline offers a lifeline for members in need of advice. Here’s another selection of your questions
Q. Can a sole trader’s trading loss be set against capital gains?
A. If a claim for loss relief under ITA 2007 s 64 (to set the loss against general income of the tax year and the previous year) is made this can be extended under ITA 2007 s71 and TCGA 1992 s 261B to be set against capital gains. The relief is available only after relief has been given under ITA 2004 s 64, or otherwise under ITA 2007. The trade must be carried on in an active capacity.
Q. How much Class 1 NIC should be paid by an employee for state pension entitlement?
A. Employees have their rights to state pensions protected by reference to the lower earnings figure and are treated as paying notional NIC between the lower earnings figure, which for 2011/12 is £102, and the primary threshold, which for 2011/12 is £139.
Q. A company has bought another business which included the sale of goodwill. How is this dealt with?
A. From 1 April 2002 expenditure on the creation, acquisition or enhancement of intangible fixed assets are brought into account in calculating a company’s income (CTA2009 Part 8). Goodwill is classed as an intangible fixed asset. The cost can be depreciated over the asset’s useful life or an irrevocable election can be made, not two years after the end of the accounting in which the goodwill was acquired, to claim the allowances at a fixed rate of 4% per annum. Gains and losses when the goodwill is disposed of are taken into account in calculating the income (note this is only available to limited companies). Please note that on incorporation of sole trader or partnership where the business commenced prior to April 2002 this relief will not be available.
This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email firstname.lastname@example.org or by ‘phone on 0800-074-2896