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pciam > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

What are the three main personal taxes?

A

Income Tax, Capital Gians Tax, Inheritance Tax

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2
Q

What test do we use to test residence?

A

The Statutory residence test (SRT)

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3
Q

What is the first statutory residence test?

A

This is the first oversear test is that an individual is present in the UK for fewer than 16 days in the current discal year

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4
Q

What is the second statutory residence test?

A

Present in the UK for fewer than 46 days in the current discal year and not present in the UK during the last three fiscal year

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5
Q

What is the third statutory residence test?

A

Work full time overseas (averaging 35 hours per week) and spend fewer than 91 days in the UK which no more than 30 were spent working.

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6
Q

What is the statutory residence test?

A

It tried to assertain if you should be seen as a UK or foreign resident for income and capital gains tax purposes

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7
Q

What happens if an individuals circumstances does not fall into either of the three automatic overseas tests?

A

It will then go to the Automatic UK test

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8
Q

What is the automatic UK test?

A

This is a residence test that is split in three and is used if the normal statututory residence test did not apply.

FIrst test is that the individual is rpesent un the UK for at least 183 days in a fiscal year or,

second test is if their only main home is in the UK (they must have owned or rented it for at least 91 consequtive days and spent at least 30 days there in the tax year, or

Third test, they work full time in the UK

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9
Q

What is the first automatic UK test for residency?

A

FIrst test is that the individual is rpesent un the UK for at least 183 days in a fiscal year

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10
Q

What is the second automatic UK test for residency?

A

second test is if their only main home is in the UK (they must have owned or rented it for at least 91 consequtive days and spent at least 30 days there in the tax year

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11
Q

What is the third automatic UK test for residency?

A

Third test, they work full time in the UK

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12
Q

What happens if an individuals circumstances does not fall into either of the three statutory residence tests or the three automatic UK tests for residency?

A

They will then be tested against the Sufficient ties test (STT)

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13
Q

What is the sufficient ties test?

A

STT Broadly determines residency based on a combination of various factors generally surrounding the time someone spends in the UK and the number of ties they have

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14
Q

What are the ties in the sufficient ties test?

A

A family tie, an accommodation tie, a work tie, a 90-day tie

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15
Q

What is the 90 day test in the sufficient ties test?

A

It looks at whether you have been in the UK more than 90 days in either of the previous two fiscal years

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16
Q

When it comes to a UK resident, how are their income and capital gains tax taxes?

A

They need to tax on their worldwide income and gains on an arising basis (and it doesn’t have to be remitted to the UK to be taxable)

17
Q

When it comes to an overseas resident, how are their income and capital gains tax taxes?

A

They are taxable on their UK income as it arises and have no CGT liability (Except for gains on UK residential property)

18
Q

What can a UK residence non-domiciled individual elect to pay less tax on overseas earnings?

A

They could elect for the remittance basis tax charge. This is a charge where they choose to just pay tax on the overseas income specifically remitted to the UK.

19
Q

What are the remittance basis charges for a UK resident non-dom?

A

7 out of 9 years: £30,000 per year
12 out of 14 years: £60,000 per year
After 15 years deemed UK domiciled

20
Q

What is the remittance basis charge for individuals who have been residents for 7 out of the last 9 years?

A

£30,000 per year

21
Q

What is the remittance basis charge for individuals who have been residents for 12 out of the last 14 years?

A

£60,000 per year

22
Q

How long does an individual need to be a UK resident non-domiciled in the UK to automatically be seen as domiciled?

A

The last 15 years

23
Q

What is the minimum unremitted foreign income needed for the government to charge the remittance basis charge?

A

£2,000 unremitted foreign income/gains

24
Q

Which allowances does an individual who have elected for the remittance basis charge lose?

A

They lose the income personal allowance and the CGT annual exemption

25
Q

Is it residency or domicile that is a key driver for IHT?

A

Domicile

26
Q

What is the different IHT implication for a domicile vs a non-domiciled?

A

A UK domiciled individual is liable for UK IHT on their worldwide estate
A non-UK domiciled is only liable to UK IHT on their UK estate

27
Q

What are the four types of domicile?

A

Domicile of origin, domicile of choice, domicile of dependency, deemed domicile

28
Q

How can you acquire a domicile of origin?

A

You acquire this from your parents

29
Q

How can you acquire a domicile of choice?

A

You need to be at least 16 and you get it if you move to a new country with the intention of living there permanently

30
Q

How can you acquire a domicile of dependency?

A

You get this if you are a minor child (under age of 16) and their domicile is dependent on their parents

31
Q

How can you acquire “deemed domicile” status?

A

You get this if you have been a resident in the UK for more than 15 out of the past 20 years. It will apply in the sixteenth year of residence.

32
Q

What are the filing days for filing taxes (individual)?

A

31st October if on paper and 31st of Jan if online both after the fiscal year

33
Q

What is seen as non-savings income?

A

Income from employment, pensions and some social security benefits
Profits from trafe, profession or vocation
Rental income

34
Q

What is seen as savings income?

A

This is basically interest

35
Q

What are the three types of earned income when it comes to income tax?

A

Non-savings income, savings income, and UK dividend income

36
Q

What are the savings income allowances?

A

Basic rate - £1,000
Higher rate - £500
Additional rate - £0

37
Q

What is the dividend allowance?

A

£1,000

38
Q

What are the five types of exempt income?

A
  • Interest and terminal bonus on NS&I products
  • Premium bond prizes
  • Gambling and betting winnings such as National lottery, horse racing, and spread betting
  • Interest and dividends from individual savings accounts (ISAs)
  • Dividends received from venture capital trusts investments

pciam (7 decks)

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