Taxation: Chargeable vs Exempt Income

Includes income from employment, trading, renting property, and investments (interest, dividends).
Taxable state benefits such as carer’s allowance, jobseeker's allowance, and state pension qualify as chargeable income.
Other sources encompass pensions, certain social security benefits, and casual work earnings.

Interest from National Savings Certificates and ISAs (including junior ISAs) is exempt from tax.
Winnings from betting, competitions, lotteries, and premium bonds are tax-free.
Some social security benefits (e.g., housing benefit, child benefit) are not taxable.
Exemptions also cover statutory redundancy pay, scholarships, income tax repayment interest, and specific apprenticeship bursaries.
Compensation payments under qualifying schemes, such as the Windrush compensation scheme, are exempt.

Exempt benefits include employer contributions to registered pension schemes and trivial benefits under £50.
Non-work related gifts like birthday presents up to £300 annually are exempt from taxes.
Reasonable childcare facilities and a mobile phone for personal use are non-taxable.
Annual social events are exempt if the cost per head is £150 or less; if exceeding, the entire cost is taxable.
Allocations for training, parking, and additional costs for remote work may also be exempt.
Non-cash long service awards and eye tests for VDU users are tax-free.

Capital expenditures are disallowed; it is crucial to differentiate between repairs (revenue) and improvements (capital).
Repairing a newly acquired dilapidated asset is classified as capital.
Use of industry-standard materials for repairs (e.g., upgrading windows) is considered revenue.

Depreciation is disallowed; profits and losses on asset disposal must be managed accordingly.
Add back depreciation and losses on disposal, deduct profits on disposal in assessments.

Disallowed items include sole trader drawings and excessive remuneration to family or friends.
Partners' salaries may also be treated as appropriations of profit.
Using goods for personal purposes constitutes profit appropriation.

General provisions for bad debts or stock are allowable; specific provisions can also be permitted.
Trade-related bad debts are deductible while non-trade bad debts are disallowed.

Non-staff entertainment costs are disallowed while expenses related to staff entertaining are allowable.

Gifts to employees and trade samples (limited to one per customer per year) are tax-deductible.
Gifts to customers that include advertising, and do not consist of food, drink, tobacco, or exchangeable vouchers are also allowable.