Income Tax Computation Flashcards
(14 cards)
How is the child benefit charge applied?
- The charge is 1% of child benefit received for every £200 of ANI (adjusted net income) between £60,000 and £80,000.
- This is added to the income tax liability.
What is the arising basis for income tax?
UK-resident individuals will pay UK income tax on all worldwide income.
What is the remittance basis for income tax?
Non-resident UK taxpayers pays UK income tax on UK income and when foreign income is remitted to the UK.
When is the remittance basis automatically applied?
When a non-domiciled UK-resident individual has unremitted foreign income and gains < £2,000 in the tax year.
If the remittance basis is automatically applied - are they entitled to a personal allowance?
Yes.
If an individual claims the remittance basis - do they receive a personal allowance?
No.
if an individual claims the remittance basis - how is remitted foreign income treated as?
It’s ALWAYS treated as non-savings income.
When does a remittance basis charge (RBC) apply and where is it applied?
- An RBC of £30,000 will apply if the individual has been UK resident for 7 out of last 9 tax years.
- or £60,000 if the individual has been UK resident for 12 out of the last 14 tax years.
When is an individual deemed UK domicile?
Once an individual has been resident for 15 years or more.
Where DTR is applied, is overseas income calculated as gross or net?
Gross, so you would find out the total income before being taxed.
What is DTR on the lower of?
- UK tax on overseas income (calculated on a marginal basis)
- Foreign tax suffered on overseas income tax
Where there are multiple sources of foreign income, how should you handle calculating these?
Begin by calculating the full income tax liability then repeat the computation but subtract the overseas income suffering the highest rate of overseas tax. The difference between the computation including and excluding that specific foreign source of income is the UK income tax on it.
When dealing with trading income that involves VAT, what must we ensure when calculating taxable income?
That VAT is exclusive of the taxable income (multiply by 5/6).
What is the blind person allowance for 2024/25?
£3,070.
