6 Income tax/ CGT/IHT Flashcards
What is income?
regular recurring revenue that you receive eg salary, interest on saving in bank, dividends from a company.
What is income expenditure?
an expense is incurred day-to-day trading eg bills for heating, lighting, rent etc.
What is Capital?
One-off transactions like a capital asset eg shares, property etc.
What is capital expenditure?
The original cost price
So, when you buy an asset, it will appreciate overtime, so capital expenditure is the original price that you paid for it, and this is what’s taxed
What basis are individuals assessed on to pay tax?
Tax year
Runs from 6 April in one calendar year to 5 April in the next
What is the personal allowance for this year?
£12,570
What is the annual exemption?
£6,000
How do you calculate non-savings?
Taxable income - (savings + dividends)
When is CGT calculated?
If an individual sold a capital asset
What is Business Disposal Relief and what is its effect?
- exemption where an individual disposes their shares
- effect: reduces rate from 20% to 10%
What is Investors’ Relief and what is its effect?
- exemption where someone sells their shares
- effect: reduces liability rate from 20% to 10%
What is Rollover Relief?
where an individual sells a qualifying asset eg property and replaces it with another qualifying asset which defers the payment of tax until the individual sells that replacement asset
What is Hold-over relief?
where you gift a capital asset eg shares in a business
- the receiver of the gift AND decides to sell it, then they will pay tax
What is Business Property Relief?
Where the exemptions are available to lifetime transfers and death estate
What does business property relief include?
- a business
- shares in a quoted company
- shares in an unquoted company
- land/machinery
