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IMC Unit 1 > 6 - Taxation in the UK > Flashcards

6 - Taxation in the UK Flashcards

1
Q

What is the are the basic, higher and additional tax rates for income tax?

A

20%, 40% and 45%

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2
Q

What are the Basic, higher and additional income tax brackets?

A

Basic - £0 - £37,700
Additional - £37,701 - £125,140
Higher - £125,140 +

(0-5000 savings rate 0%)

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3
Q

What are the dividend rates of income tax?

A

Basic: 8.75%
Higher: 33.75%
Additional: 39.35%

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4
Q

What are the basic higher and additional savings income allowances?

A

Basic: £1000
Higher: £500
Additional: 0

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5
Q

What savings income instrument pays NET? (20% already deducted)

A

Corporate bonds

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6
Q

Dividend allowance ?

A

£1000

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7
Q

Tax on discretionary trusts - what is the general trust rate for all other income (not dividends) over £1000?

A

45%

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8
Q

Tax on discretionary trusts - what are the rates of income tax on discretionary trusts for the first £1000?

A

Dividend income: 8.75%
All other income (property, savings, trading) 20% BRT

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9
Q

What class of National insurance contributions do employees pay?

A

Class 1 on earnings

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10
Q

What class of NIC do employers pay?

A

Class 1a: if employee receives taxable benefits
Or
Class 1b: PAYE

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11
Q

What class of NIC do self employed people pay?

A

Class 2 or 4

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12
Q

What class of NIC is voluntary contributions?

A

Class 3

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13
Q

What are the CGT rates on chargeable assets?

A

BRT: 10%
HRT/ART: 20%

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14
Q

What are CGT rates for non-residential property?

A

BRT: 18%
HRT/ART: 28%

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15
Q

What assets are exempt from CGT?

A

A persons main home
Lottery & betting wins
Uk government stocks (gilts) and most corporate bonds
ISAs
Private cars
NS&I savings certificates
Shares under EIS or SEIS
Foreign currency for personal use

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16
Q

How much is the annual CGT exemption?

A

£6000

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17
Q

Can capital losses be brought forward indefinitely to set against future gains?

A

Yes, only if they are claimed in the same tax year

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18
Q

What is the nil rate Band and IHT rate on excess?

A

£325,000 and 40%

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19
Q

Can any unused nil rate be transferred upon death?

A

Yes the % can be to a spouse or civil partner (anything below 325k)

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20
Q

If a person’s estate passes to their spouse and they are both UK domicile, what IHT do they pay?

A

None even if the estate is above 325k

21
Q

What is the residence nil rate band? (RNRB)

A

Additional allowance when a home is passed to children or grandchildren at the value of £175,000 (it is combined with the nil rate band up to £500,000)

22
Q

Are wedding gifts exempt from IHT?

A

Yes, up to £5000

23
Q

If you donate at least 10% of your estate to charity what is the revised IHT rate?

A

36%

24
Q

What is a Potentially Exempt Transfer (PET)?

A

That the asset is free of IHT if donor lives on for 7 years

25
Q

What is a CLT and at what rate are they liable to IHT?

A

Chargeable lifetime transfer - 20% in excess of the nil rate band

26
Q

What exemptions are 100% exempt from IHT?

A

PETs : donor lives for 7 years after the gift
Gifts to spouse/partner

27
Q

Exempt lifetime gifts? (IHT)

A

Annual exemption: £3000
Wedding gifts up to £5000
gifts to charities

28
Q

If a higher rate tax payer makes capital gains of £150,000 and capital losses of £20,000 in current tax year, carrying losses of 11,500 from previous year. Calculate the CGT payable. And is it cheaper for them to transfer half the assets to spouse as a BRT payer?

A

150k - 6000 allowance
144,000
(20,000)
(11,500)
=112,500 x 0.2 (HRT)
= £22,500

Yes cheaper -
75k
(6000)
(20,000)
(11,500)
=37,500 x0.2 = 7500

75k
(6000)
= 69,000 x 0.1= 6900
Total = 14,400

29
Q

Are part A, B and C resident statuses in UK?

A

Part A - automatically non resident
Part B - automatically resident
Part c - sufficient ties test

30
Q

Part A resident status criteria?

A

1.Visit uk for less than 16 days
2.Non UK resident for past 3 tax years
3.Visit UK fewer than 46 days
4. Work full time overseas

31
Q

Part B resident status in uk criteria?

A
  1. Present in UK for 183 days or more
  2. Only residence in UK but had home for at least 91 days and lived there for 30 days
  3. Full time work in UK
32
Q

Income tax/ CGT on UK resident?

A

100% on worldwide gains/income

33
Q

IHT applies to UK domicile and non-UK domicile persons how?

A

Uk domicile: worldwide assets
Non uk domicile: UK assets

34
Q

UK TAX COMPLIANCE: tax returns need to be submittted by which date?

A

31st October following end of tax year for hard copy
Electronic is 31st Jan following end of tax year

35
Q

what is the rate of stamp duty reserve tax (SDRT)?

A

0.5% to nearest penny

36
Q

stamp duty reserve tax is charged when an investor buys what?

A
  1. Shares in a company (except for AIM shares, those listed in growth markets such as AQSE )
  2. Options to buy shares
  3. Shares in a foreign company with UK Register
  4. Rights arising from shares already owned
37
Q

How is SDRT charged on paperless transactions?

A

Through CREST, automatically deducting SDRT and sending to HMRC

38
Q

Stamp duty rates (physical transactions over £1000)

A

0.5% rounded to nearest £5

39
Q

What are the Stamp duty land tax (SDLT) bands and rates for residential property?

A

£0 - £250,000 = 0%
£250,001 - £925,000 = 5%
£925,001 - £1,500,000 = 10%
More than £1,500,000 = 12%

40
Q

What are the Stamp duty land tax (SDLT) bands and rates for non- residential property?

A

£0 - £150,000 = 0%
£150,001 - £250,000 = 2%
More than £250,000 = 5%

41
Q

What is the anti-avoidance charge for SDLT?

A

15% on entire purchase where companies and collective investment schemes buy residential properties over £500,000

42
Q

Corporation tax is paid on what?

A

Worldwide profit and chargeable gains for uk resident companies and just UK profits for non uk companies

43
Q

What are the corporation tax rates and bands?

A

19% for companies with £50,000 profits or less
25% for companies with £250,000 profits of more

44
Q

Can trading losses be offset for corporation tax?

A

Yes, can be offset against profit and gains from the previous year and future years

45
Q

What profits makes a company a large or very large company ? And how often do they pay corporation tax

A

Large - £1.5m
V large - £20m
Quarterly

46
Q

How often do companies with profits less than £1.5m pay corporation tax?

A

9 months and 1 day after accounting year end

47
Q

What are VAT rates?

A

0% 5% or 20%

48
Q

What is exempt from VAT?

A

IFA arranging the sale of retail investment for a customer

49
Q

What constitutes for 0% VAT?

A

Zero-rated supplies such as children’s clothes, supplies

IMC Unit 1 (6 decks)

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