Overseas tax and National insurance

Question 1

Class 1

Answer 1

Paid by employees (primary) and their employers (secondary) on cash earnings
Collected under PAYE system monthly

Question 2

Class 1A

Answer 2

Paid by employers on taxable benefits
Payable by 19/7

Question 3

Class 1B

Answer 3

Paid by employers on grossed-up value of earnings
Gross up the value of benefit by 100 / (100 - employee’s % marginal rate of IT)
e.g. For BRB tax payer gross up by 100/80
Payable by 19/10

Question 4

Class 2

Answer 4

Paid voluntarily by self-employed individuals
Payment due by 31/1

Question 5

Class 4

Answer 5

Paid by self-employed individuals on taxable trading income
Collected via self-assessment with payments on account and a final balancing payment

Question 6

Net disposable income for an employee calculation steps

Answer 6

Record cash received
Deduct cash payments
Deduct income tax payable
Deduct Class 1 Primary NICs

Question 7

Unilateral double tax relief

Answer 7

Calculate tax including overseas income Calculate tax excluding overseas income
DTR = the difference between the two

Question 8

Remittance basis pros

Answer 8

Allows individuals who are UK resident but non-UK domiciled to avoid:
- IT on income not brought into UK
- CGT on proceeds not brought into UK

Question 9

Remittance basis cons

Answer 9

Lose entitlement to UK personal allowance and CGT annual exempt amount
Have to pay a remittance basis charge
- £30k if resident for 7 / last 9 years
- £60k if resident for 12 / last 14 years

Question 10

Automatic remittance basis application

Answer 10

Unremitted overseas income and gains for the tax year are under £2k
Individual is non-UK domiciled, has no UK income/gains, doesn’t remit any overseas income/gains and has been UK resident for less than 6 / last 9 years