Module 3 Other income, allowances and deducations Flashcards
How will an individual be classed as domiciled in the UK?
If they have a permanent home in the UK (only one domicile at a time)
What tax will an individual pay if they are resident and domiciled in UK?
Will pay UK tax on any income no matter where it is earned in the world
What tax will an individual pay if they are resident but not domiciled in the UK?
If no action is taken, worldwide income will be taxed and a personal allowance is given
A remittance basis can be claimed, overseas income only taxed if remitted to the UK but no personal allowance is given, all UK income is taxed.
What tax will an individual pay if they are not a resident and not domiciled in the UK?
Will only be taxed on income arising in the UK (No personal allowance)
What is double tax relief?
It means overseas income is not double taxed and only the lower of overseas tax/uk tax is taken into consideration.
Must be the gross amount that is used
Tax liability minus (lower of UK tax on property income/oversea tax) = new tax liablility
Can Blind person allowance be transferred?
It can be transferred to spouse/civil partner and it is a deduction on income
What is the marriage allowance?
10% (£1250/£1190) of Personal allowance can be transferred to spouse/civil partner if not fully used and only if they are a basic rate taxpayer (scottish is starter/basic/intermediate)
it is a 20% income tax reducer rather than a deduction on income
What are the deducations you can take away from total income?
Eligble interest payments - Loan to purchase plant/machinery , loan to purchase a close company, loan to purchase an interest in a partnership.
Gifts of shares/land/buildings to charity
How does gift aid give taxpayers tax relief?
Tax relief at source and tax relief by extending income tax band by the gross donation.
How does give as you earn reduce tax liability?
Donations are deducted from gross wages and this reduces their taxable income.
