R03 Flashcards

Question

For how many years can the annual allowance for pension contributions be carried forward?

Answer 1

£1,073,100

Answer 2

Contributions are deducted from an employee’s net salary The employer deducts only 80% of the total contribution from the employee’s salary, the scheme then adds an amount equal to basic rate tax relief Higher and additional rate tax relief is given by extending the respective tax bands by the gross pension contribution (done via self-assessment)

Answer 3

Contributions are deducted from an employee’s gross salary (i.e. before tax has been deducted). The employee then pays tax only on salary ‘net’ of the contribution This means the employee automatically receives tax relief at their highest rate of income tax

Answer 4

Employees are taxed on the cash equivalent of a benefit rather than on its second-hand value This is the cost to the employer of providing benefit Contributions made by the employee towards the cost are deducted

Answer 5

The cash equivalent is the annual value of the use of the asset plus any maintenance costs The annual value is 20% of market value when the asset was first provided If benefit is rented by employer, the benefit is the higher of the annual value or rent paid

Answer 6

Goods and services sold by the business that are provided free or at a discount to employees Services and facilities provided in house Assets used in the business made available for

Answer 7

The benefit is calculated as a percentage of the list price of the car The percentage is determined by the cars carbon dioxide emissions Any discounts given to the employer are ignored but accessories are added

Answer 8

Not classed an employee benefit as they are used by several people and not normally kept at employees’ home

Answer 9

The benefit is a percentage of a set figure announced each tax year, currently £24,600 The percentage that is used is the same as those for the car benefit charge

Answer 10

For income tax purposes, the mileage rates that can be paid free of tax is 45p per mile for the first 10,000 miles, then 25p per mile thereafter For NIC purposes, there is a flat rate 45p for all business miles

Answer 11

Employees incur a tax charge if the employer provides low-rent or rent-free accommodation The assessment is based on the annual value. This is the rent that would be reasonably expected to be paid if the property were let, or the rent paid by the employer if this is greater

Answer 12

The accommodation is necessary for the performance of the employee’s duties If it helps the employee to perform their duties better There is a threat to the employee’s security

Answer 13

Cash vouchers Non-cash vouchers Credit tokens (company credit cards) Medical insurance

Answer 14

Group income protection Provision of meals Mobile phones Long service awards Suggestion schemes Workplace childcare

Answer 15

All qualifying individuals have an annual PA of £12,570 (there is no minimum age requirement) It is reduced by £1 for every £2 an individual’s adjusted net income exceeds £100,000 If adjusted net income over £125,140 PA fully removed

Answer 16

Adjusted net income is net income (total income less deductions for loss relief and interest payments) less the gross amount of personal pension contributions and gift aid contributions

Answer 17

An individual can transfer 10% of their personal allowance to their spouse/civil partner. The transferable amount is therefore £1,257 This is beneficial where one partner is a low earner and does not utilise their full PA It can only be used if the receiving spouse/civil partner is a basic rate taxpayer

Answer 18

This can be avoided by reducing adjusted net income. The methods to do this are: Use tax free investments, such as ISA’s, to turn taxable investment income into non-taxable income Making pension payments (subject to relief at source) and making donations under gift aid

Answer 19

£2,520 is available to registered blind people resident in the UK. It is deducted from income the same way as the personal allowance

Answer 20

They can be extended by the addition of the gross value of payments into pension schemes (subject to relief at source) and donations to charity under gift aid

Answer 21

For basic rate taxpayers, the personal savings allowance is £1,000, and for higher rate taxpayers, it is £500 Additional rate taxpayers are not entitled to a personal savings allowance

Answer 22

Interest Interest from purchased life annuity payments Gains from life assurance contracts

Answer 23

No tax relief is given for most maintenance payments made to divorced spouses or children with one exception When either spouse was born before 6th April 1935 and the payments are made to a divorced spouse, not the children The relief is given at 10% on payments up to £3,510 per year

Answer 24

The £100 rule applies on income derived from an asset that the parent has given the child Any income earned over £100, will be taxed as the parents (unless held in a JISA or a Child Trust Fund) The rule only applies to parents, therefore investments provided by anyone else escape the rule, e.g. grandparents

Answer 25

If one parent’s adjusted net income exceeds £50,000 and they or their partner is in receipt of the child benefit an income tax charge will apply If one income is over £50,000, the charge is 1% of the family’s child benefit for every complete £100 of income over this

Answer 26

£21.15 a week for the first child and £14 a week for each subsequent child

Answer 27

The settlor is the individual who creates the trust The trustees are the legal owners of the trust property, who hold and administer it for the benefit of the beneficiaries The beneficiaries are those who benefit from the trust once it has been established

Answer 28

The income is taxable as the beneficiary’s income at their marginal rate The beneficiary is liable for the tax and has access to all their normal allowances They must include the trust income on their self-assessment

Answer 29

If a parent gifts money to an unmarried minor child (under 18) through a trust, the trust is treated as a settlor-interested trust. This means that the trust income is usually taxed as the parent’s income The £100 rule applies

Answer 30

Disabled persons and relevant minors A ‘disabled person’ is somebody who is eligible for some form of disability benefits (e.g. attendance allowance, disability living allowance etc.) A relevant minor is a child who has not yet reached 18 and at least one parent has died

Answer 31

Although the beneficiary entitled to the trust income is taxed on that income as it arises, the trustees are liable for basic rate tax on any income they actually receive (paid on behalf of the beneficiary)  Savings income is taxed at 20% without the personal savings allowance  Dividend income is taxed at 7.5% without the use of the dividend allowance  Any other income received is taxed at 20%

Answer 32

1. UK dividends 2. Foreign dividends 3. Savings income 4. Other income

Answer 33

Any income on the R185 form, must be added to their other income for the tax year If the beneficiary is a non-taxpayer, they can reclaim some or all of the tax that has been deducted If they are a basic rate taxpayer, they will have no further tax to pay If they are a higher or additional taxpayer, they will have to pay any additional tax due

Answer 34

Trustees have a standard rate band of £1,000 The band is first applied to non-savings income, then savings income and finally dividend income Any income received within the standard rate band is liable to income tax at the basic rates (7.5%/20%), after this income is taxed at the highest rates (38.1%/45%) Trustees unable to use personal savings allowance and dividend allowance

Answer 35

If a settlor receives a capital sum from the trust this is charged to income tax Income tax will be charged at a maximum level of the undistributed income If the capital sum received is more than the level of undistributed income, then the balance can be carried forward for up to 10 years to match against future undistributed income

Answer 36

Class 1 – payable by employees and their employers (percentage rates) Class 2 – paid by the self-employed at a flat rate of £3.05 Class 3 – voluntary contributions paid at a flat rate of £15.30 Class 4 – paid by the self-employed as a percentage of their profits

Answer 37

State pension New style Jobseeker’s Allowance Bereavement payments Contribution based Employment and Support Allowance Maternity allowance

Answer 38

They can be calculated on: regular wages, bonuses, overtime, holiday pay, incentive payments, maternity/ paternity pay, adoption pay, sick pay, lump sums for joining/leaving employment, payments to meet personal debts and payments in

Answer 39

Any contributions made into an occupational pension scheme are free of NICs as they are not classed as earnings

Answer 40

Employees pay NICs between the age of 16 and State pension age (66) Employers still pay secondary class 1 NICs beyond the employees State Pension age

Answer 41

Lower Earnings Level (LEL) - £120/week, £520/month, £6,240/year Primary Threshold Contribution (PCT) - £184/week, £797/month, £9,568/year Upper Earnings Limit (UEL) - £967/week, £4,189/month, £50,270/year

Answer 42

Employees don’t pay NICs until their weekly or monthly income is above the PCT Once PCT is exceeded employees NIC is payable at the main rate of 12% Once UEL is exceeded employees NIC is payable at the additional rate of 2%

Answer 43

For employees under the age of 21, employers pay 0% on NICs on earnings up to the Upper Secondary Threshold (UST) (£50,270) The same rule applies for apprentices aged under 25 on earnings up to the Apprentice Upper Secondary Threshold (AUST) (£50,270)

Answer 44

If employees earn between the LEL and the PCT they don’t pay NI but get a credit for the State Pension

Answer 45

Employers have nothing to pay up to the Secondary Contribution Threshold, and 13.8% on anything above this with no upper limit

Answer 46

Businesses can deduct £4,000 from their total NIC liability if their NIC liability in the previous tax year was less than £100,000

Answer 47

These are paid by employers in relation to most benefits in kind (fringe benefits) e.g., company car There is a single rate of 13.8%

Answer 48

Collected through PAYE with income tax

Answer 49

Due on 22nd July of the end of the tax year in which they relate (19th July if not electronic) If this date falls on the weekend, payment must be made the previous working day unless it’s made through ‘faster payments’

Answer 50

UK individuals working in an EEA state or Norway, they can get a certificate from HMRC to pay UK contributions for up to 2 years (3 if Norway)

Answer 51

They may pay themselves irregular amounts at irregular intervals as opposed to a regular monthly pattern So their total earnings within a tax year are used when calculating NICs Income taken as dividends, rather than salary is not subject to NICs

Answer 52

Domestic workers and office cleaners Agency workers Lecturers and instructors Ministers of religion Workers in the film and television industry Labour-only subcontractors

Answer 53

Their employment may not be within UK territory and therefore not liable to Class 1 NICs. As a result, they may lose entitlement to State benefits

Answer 54

Where the individual has been in full-time training During periods of unemployment and sickness During periods of entitlement to statutory maternity/paternity pay Where income is below PCT but above LEL

Answer 55

Class 2 is a flat rate of £3.05 a week that is payable once their profits are over the Small Profits Threshold of £6,568

Answer 56

Although it shows as a weekly payment of £3.05, the National Insurance Contribution Office (NICO) will collect these by direct debit at regular intervals throughout the tax year, they are collected 4 months in arrears

Answer 57

They have to pay Class 4 NICs when profit exceeds £9,569 The rate is 9% until profits reach £50,270 when the additional rat of 2% becomes chargeable This is paid direct to HMRC via self-assessment

Answer 58

If a fisherman is self-employed and shares the profits of a fishing boat registered in GB, they are liable to Class 2 and 4 NICs, even they work outside of the UK A special rate of £3.70 per week applies for Class 2 NICs

Answer 59

Class 1 NICs are deducted from their salary, however this is not always taxed under PAYE Liable to class 2 and 4 NICs from trading profits from the shop Salary from the Post Office is not included in the small profits threshold for class 2’s or when assessing profits for class 4 The liability may be limited due to the annual maximum

Answer 60

It is a tax on the gain arising from the disposal of certain assets The starting point for calculating the gain is the disposal proceeds less the acquisition costs

Answer 61

Disposals between spouses and civil partners are not chargeable gains When the receiving spouse disposes of the transferred asset, they will be liable to pay CGT The first spouses acquisition cost will be used to calculate the gain

Answer 62

The market value of the asset

Answer 63

Occurs when disposals are made between individuals with a close connection (family) or when market value of the asset can be used instead of the sale price for disposals between unconnected parties (between friends)

Answer 64

Consideration is deferred if it is not paid at time of sale If the amount is fixed it is called ascertainable deferred consideration If the amount is variable it is called unascertainable deferred consideration Any ascertainable deferred consideration must be included in the disposal proceeds

Answer 65

Annual exempt amount Chattels and wasting assets Principal Private Residence (PPR) Life insurance policies in the hands of the original owner ISAs Gilts and corporate bonds

Answer 66

All individuals are entitled to £12,300 exempt amount for 2021/22. It is deducted from chargeable gains after deducting losses and all reliefs The exempt amount cannot be carried forward

Answer 67

Last 9 months of ownership Up to a year between buying the property and living in the property Periods totalling 3 years, if the periods were preceded and followed by residence and no other residence was exempt Periods totalling 4 years, where the owner was employed elsewhere in the UK, if the periods were preceded and followed by residence and no other residence was exempt Periods of living in job related accommodation

Answer 68

The period prior to April 1st 1982 is ignored, so if a property was purchased before then, the acquisition price is the value on this date and the period of ownership starts from then

Answer 69

There is a letting exemption where part of the property is let as residential accommodation and the other part is occupied by the owner The gain on the let part of property is exempt up to the lesser of £40,000 and the exemption on the part occupied by the owner

Answer 70

1 – determine the disposal proceeds 2 – deduct the acquisition cost 3 – deduct costs of arranging the purchase and sale and any enhancement costs 4 – offset allowable losses allocated against gains taxable at the highest rate 5 – deduct the annual exempt amount in a way that minimises the tax due 6 – calculate tax at the appropriate rate

Answer 71

The rule is that the total loss must be deducted against any gain made in the same tax year before you apply the annual exempt amount Only if the gains in the tax year are insufficient to absorb the loss, can the excess loss be carried forward and set against gains in future years

Answer 72

For gains made on or after 11th March 2020, the relief covers the first £1,000,000 of qualifying gains within an individual's lifetime The gains are taxed at 10%, regardless of the individuals tax status Anything above the £1,000,000, normal CGT rules apply Assets must have been owned for two years before the

Answer 73

This extends business asset disposal relief to external investors in unlisted trading companies This gives a separate £10,000,000 lifetime limit Qualifying investments within the limit are charged at 10%, regardless of the individual’s tax band

Answer 74

This can be claimed against gains on disposal of particular assets by way of a gift (mainly those that are chargeable to IHT or trading assets) If holdover relief is claimed, no CGT is payable at the time of the gift The donee is deemed to have acquired the assets at the donor’s base cost, rather than the value at the time of the gift

Answer 75

Holdover relief is available on gifts of trading assets. A trading asset is:  An asset used in the trade of the donor or their personal company  Can include shares and securities of trading companies, provided they are not quoted on a recognised stock exchange and the donor holds at least 5% of the total

Answer 76

When an asset is sold CGT becomes payable even if all the proceeds are reinvested. Rollover relief allows a business to sell assets and reinvest them into trade or business assets and defer the CGT liability until the new assets are sold

Answer 77

If a self-employed person incorporates the business and receives shares, technically this is a disposal. Claiming incorporation relief defers CGT until the new company is sold

Answer 78

For EIS shares, the gain on the original disposal is deferred until disposal of EIS shares For SEIS reinvested gains are not deferred. Instead, 50% of reinvested capital gains are exempt and the other 50% of reinvested gains are chargeable to CGT. Relief is restricted to a limit of £100,00 of gains reinvested in each tax year

Answer 79

1. Acquisitions on the same day (the same day rule) 2. Acquisitions within the following 30 days (the bed and breakfast rules) 3. Acquisitions of all other shares on an average cost basis

Answer 80

It is a method of realising a gain or loss on an investment without changing the size of the investment. It involves selling shares or units one day and buying them back the next

Answer 81

A Bonus (or scrip) issue are distributions of free shares among existing shareholders The new shares are treated as being acquired on the same date as the original holding There are no extra acquisition costs

Answer 82

A capital gain is calculated in the same way for a trust as it would be for an individual The CGT rate for these trusts is 20%, unless it is residential property which is 28% Transfer of assets to a beneficiary is treated as a disposal, whereby the market value is used to calculate the gain

Answer 83

The trusts have an annual exemption, usually half of the individual exemption (£6,150) If the settlor has created a trust for a disabled person, regardless of how many trusts the settlor has created, they will have access to the full individual exemption (£12,300)

Answer 84

£0 to £325,000 – 0% Over £325,000 – 40%

Answer 85

Where at least 10% of the net estate is left to charity

Answer 86

£0 to £325,000 – 0% Over £325,000 – 20%

Answer 87

In addition to the normal £325,000 NRB, £175,000 is available when a family home is inherited by a direct descendent Protects the home (partially or fully) from IHT

Answer 88

Any unused NRB and RNRB can be transferred to surviving spouse/ civil partner It is the proportion of the unused band from the first death that is transferred to the survivor

Answer 89

The RNRB is not available when property is left to a discretionary trust, as the trustees will be the legal owners rather than a direct descendent The RNRB will be available if a property passes to a trust with an immediate post death interest (IPDI) if direct descendants are beneficiaries

Answer 90

Exempt transfers: no tax is ever payable Potentially exempt transfers (PET): no tax is payable when gift is made. They become exempt if the donor survives seven years Chargeable lifetime transfers (CLT): tax may be payable when the gift is made. They will become exempt if the donor survives seven years

Answer 91

Transfers are deemed to be PETs if made to an individual or a specified trust (bare trust) Transfers are deemed to be CLTs if made to an interest in possession or discretionary trust or the donor retains interest

Answer 92

Individuals domiciled in the UK are liable to pay IHT on their worldwide property For those domiciled outside the UK, they are only liable to IHT on UK property

Answer 93

Government securities are not liable to IHT if the owner is not a UK resident, regardless of domiciled status

Answer 94

Transfers between spouses and civil partners Gifts to charities Gifts to qualifying political parties Gifts for national purposes Gifts of land to housing associations

Answer 95

IHT will always seek to tax the reduction in the donor’s wealth (the loss to the donor’s estate of making a transfer) rather than the increase in the wealth of the recipient

Answer 96

IHT is only charged on dispositions that are gifts (or part gifts) There can be no IHT on commercial transactions if full consideration is received, as there would be no loss to the estate

Answer 97

£3,000 If the whole or part of the annual exemption has not been used in the previous tax year it can be carried forward Only applies to lifetime gifts Normally deducted from a PET or CLT

Answer 98

An individual can make unlimited outright lifetime gifts to any person up to £250 without giving rise to IHT liability It cannot be combined with the annual exemption It is not applicable for gifts into trusts or as part of a larger gift

Answer 99

If a lifetime transfer is made out of normal expenditure, from an individual’s income, and does not affect their ability to maintain their usual standard of living, then these transfers are exempt from IHT

Answer 100

Lifetime gifts for marriages/civil partnerships are exempt if they are within:  £5,000 for a parent  £2,500 for a remote ancestor e.g., grandparent  £1,000 for anyone else

Answer 101

Payments for a child’s maintenance, education or training are exempt, until the later of the child turning 18 or the child leaving full-time education

Answer 102

Estates are tax free for those who die as a result of wounds or diseases contracted on active service or whilst on duty

Answer 103

The gift becomes chargeable The donee is liable to pay any tax Tax is chargeable on value of PET at the date it was made Calculation takes into account 7-year cumulation at date of gift with taper relief

Answer 104

If the donor has survived for at least 3 years after the PET was made a reduced parentage is used:  3-4 years 20% reduction  4-5 years 40% reduction  5-6 years 60% reduction  6-7 years 80% reduction

Answer 105

A gift into a bare trust is a PET as the beneficiary is absolutely entitled to the assets, therefore in effect is a gift to the individual Gifts to a disabled trust are also PETs, even though a disabled trust is broadly a discretionary trust

Answer 106

If it takes the donor’s seven-year cumulation is over the NRB Tax is payable at 20% on the excess over the NRB and there will be no further IHT to pay if the donor survives the next seven years

Answer 107

Yes, any tax that was paid at the time of the CLT can be deducted from the IHT liability on death

Answer 108

IHT is chargeable, if the value of the estate on death, plus any CLTs or PETs, in the last 7-years exceeds the NRB/RNRB

Answer 109

Pension funds Property outside the UK Holdings in authorised unit trusts and shares in OEICs where the beneficial owner is not domiciled in the UK

Answer 110

If the deceased received a chargeable transfer, in the 5 years before death, the tax charged on death is reduced Less than 1 year:100% 1 to 2 years: 80% 2 to 3 years: 60% 3 to 4 years: 40% 4 to 5 years: 20%

Answer 111

When impossible to say who died first, general law presumes the eldest was the first person to die If elder person left property to the younger one, there is potentially two successive tax charges For IHT purposes, it is presumed they died at the same time, avoiding the double charge

Answer 112

Business relief Agricultural relief Relief for woodlands

Answer 113

It is not available for businesses that mainly deal with investments, including land and property investments Any business property that is subject to a binding contract of sale at the time of transfer, is not eligible for relief

Answer 114

Must be owned for 2 years to qualify Available on lifetime transfers and death 100% relief for unincorporated businesses (sole trader and partnerships) and shareholdings in unquoted and AIM companies

Answer 115

Must be owned for 2 years to qualify Available on lifetime transfers and death 50% relief for controlling shareholdings in fully listed companies and for land, buildings, plant and machinery used in connection with a company controlled by the transferor or they were in connection with a partnership

Answer 116

Relief for agricultural property in the UK, Channel Islands, Isle of Man or EEA Available on lifetime transfers and death Agricultural property includes land, growing crops and farm buildings but not animals or equipment

Answer 117

Relief for growing timber in UK or EEA Only available on death and defers the tax until the timber is disposed of The relief does not apply to the land, just the timber itself

Answer 118

A gift where the donor retains a beneficial interest Most common example is gifting a house but continuing to live in it without paying full market rent

Answer 119

If the donor still retains a benefit, its value is treated as remaining in the donor’s estate and is taxed accordingly

Answer 120

Income tax is charged on the benefit people get by having free or low-cost enjoyment or use of certain assets that they used to own It is treated as an addition to their taxable income in the year in which they enjoy the benefit No tax if benefit is less than £5,000 per year

Answer 121

The charge can be avoided if the donor elects for the asset to be included in their estate on death This is done by completing the IHT500 form Election deadline is 31st January following end of first tax year in which income arises If the form is completed, the gift is subject to the gifts with reservation rules

Answer 122

Any expenses of the transfer are disregarded if they are paid by the transferor, but they reduce the value of the transfer if they are paid by the transferee

Answer 123

These are subject to the same rules as all other PETs Any IHT due is paid by the beneficiary

Answer 124

Although these are discretionary trusts, they are treated as PETs and are subject to the same rules as all other PETs The IHT due is paid by the trustees There are no periodic or exit charges that would normally apply to discretionary trusts

Answer 125

If an IIP trust is created when the settlor is alive, it is now called a relevant property trust They are now subject to the same treatment as discretionary trusts An IIP trust created on the death of a settlor is called an Immediate Post Death Interest Trust (IPDI)

Answer 126

If it was created when the settlor was alive, that is a CLT as normal If it is created on the death of the settlor, then the assets are part of the death estate

Answer 127

Every 10 years the trustees have to pay a periodic charge The assets are revalued every 10 years and there is normally a 6% charge of the market value of the assets for everything over the NRB

Answer 128

When a capital distribution is made

Answer 129

The minor must have an absolute interest to the income and capital at the age of 18 Once they reach 18, the property is treated as their own for IHT purposes No periodic and exit charges apply to income that accumulated or any capital distributions made at the age of 18

Answer 130

The minor must have an absolute interest to the income and capital no later than the age of 25 Once they reach 18, the property is treated as their own for IHT purposes Exit charges apply when the beneficiary becomes absolutely entitled to the trust property, based on the period since their 18th birthday

Answer 131

Mainly self-employed people, most company directors and people who are liable to tax on property or investment income Those who need to declare a high-income child benefit tax charge

Answer 132

Income tax on all types of income Class 2 and Class 4 NICs Capital gains tax High-income child benefit charge and collection of student loan repayments for the self employed

Answer 133

Taxpayers can choose whether to calculate the tax themselves or leave it to HMRC If no tax return is filed, HMRC will make a judgement on the tax due

Answer 134

Online tax returns 31st January following end of tax year in which it relates Paper tax returns 31st October following end of tax year to which it relates

Answer 135

If a taxpayer is usually taxed under PAYE, they can have a balancing payment of less than £3,000 collected via their PAYE for a later year if they file the return by 30th December

Answer 136

Usually in three instalments Two payments on account and one balancing payment

Answer 137

The first payment on account is due on 31st January in the tax year concerned The second payment on account is due on 31st July after the end of the tax year concerned

Answer 138

Each payment on account is based on half of the previous year’s liability

Answer 139

Income tax Class 4 NICs Child benefit income tax charge They DO NOT include Class 2 NICs, CGT and student loan repayments

Answer 140

Due on the 31st January after the end of tax year It is an adjustment to reflect actual liability due compared with amount paid on account The balancing payment also includes Class 2 NICs, CGT and student loan repayments

Answer 141

If they believe it would result in an overpayment of tax This could be because of:  Lower income  Higher deductions  A higher proportion of tax deducted at source or under PAYE

Answer 142

Payments carried back do not change the previous year’s assessment and therefore do not reduce the payment on account

Answer 143

Automatically charged on late and underpayments Currently, the interest rate charged on late income tax payments is 2.6% and for repayments, the rate is 0.5% 5% penalty for unpaid tax more than 30 days after balancing payment due

Answer 144

A fixed £100 is due for any returns not submitted by 31st January If the return is more than 3 months late, a £10 daily penalty will be charged for a maximum of 90 days This is payable even if not tax is outstanding

Answer 145

Taxpayers can amend their returns for 12 months after 31st January following the tax year Amendments may be necessary if the taxpayer made a mistake or if estimates were used on the return

Answer 146

HMRC can carry out random or targeted compliance checks HMRC can start an enquiry within 12 months of receiving a tax return

Answer 147

Employers deduct income tax and Class 1 NICs under PAYE from all payments made to employees and directors This is normally paid monthly to HMRC Employers are given a PAYE code for each of their employees

Answer 148

Designed to deduct the correct amount of tax/avoid the need to complete a self-assessment

Answer 149

Employers can choose to put the taxable value of benefits in kind through their payroll They are then treated the same as cash earnings and do not need to be reported on a P11D form

Answer 150

Employer charged penalties on a monthly basis if their submissions are late There is no penalty for the first late submission during a tax year, following this a monthly late filing penalty of £100-£400

Answer 151

Wages and salaries Fees Bonuses and commissions Holiday pay Pensions Payments under profit sharing schemes Most benefits and some expense allowances SSP, SMP, SPP, ShPP, SAP

Answer 152

For employees, PAYE is operated employee is entitled to receive payment For directors, PAYE is generally operated on the earliest of:  Date payment is made  Date director becomes entitled to be paid  Date amount is credited in company’s books  Date remuneration is fixed or agreed

Answer 153

Tax evasion involves falling to provide full and accurate information to the relevant taxing authorities It is illegal and wholly unacceptable

Answer 154

The general rule was that tax mitigation is acceptable, but tax avoidance (even if legal) was not The rule was overturned after this case, they deemed it irrelevant as to whether the purpose of a series of transactions or any scheme aimed at saving tax was to mitigate tax or to avoid tax

Answer 155

Habitual users of avoidance schemes Those with a low effective rate across total income Those who have bank accounts in Switzerland Those that appear to be understanding their tax liability Those who fail to submit their self-assessment on time

Answer 156

It made it a criminal offence for firms to fail to prevent tax evasion Particularly relevant for businesses that advise or asset clients who evade tax as a result of that advice/assistance A business can face unlimited financial penalties

Answer 157

General Anti-Abuse Rules Applies to abusive tax arrangements entered into on or after 17th July 2013 It acts as a deterrent and to counteract tax advantages

Answer 158

Disclosure of Tax Avoidance schemes Firms in the UK that market tax avoidance schemes must register with HMRC, who will give each scheme a number Those using a scheme must include the scheme number on their tax returns

Answer 159

Accelerated Payment Notices If the courts have found a tax arrangement that fails, HMRC can now requires users of the scheme to make upfront payments of disputed tax

Answer 160

These schemes avoided income tax and NICs by paying the users income as loans with no intention of repayment A loan charge applies to outstanding balances of disguised remuneration loans made from 9th December 2010 to 5th April 2019

Answer 161

Residence- the status of an individual in anyone one tax year and is primarily based on the time someone spends in the UK each tax ear Domicile – the country that an individual regards as their permanent home and tends to be quite hard to change

Answer 162

Automatically not resident in the UK Automatically resident in the UK Sufficient UK ties test

Answer 163

Spent less than 16 days in the UK during the tax year Those that were not a UK resident for the 3 previous tax years and have spent less than 46 days in the UK in the current tax year Those who work fulltime outside the UK with no significant breaks

Answer 164

Spent 183 days or more in the UK Those who have a home in the UK for 91 consecutive days and have been present in that home for a minimum of 30 days in the tax year Those who work fulltime in the UK with no significant breaks

Answer 165

When a person is present in the UK at midnight, this is counted as a day of presence This does not apply for people in transit between two places outside the UK (connecting flights)

Answer 166

When a person leaves the UK to work fulltime overseas When a person comes to the UK to work fulltime When a person leaves the UK to live overseas and ceases to have a UK home

Answer 167

If an individual does not meet any of the automatic tests, then their residence status is determined by the sufficient UK ties test

Answer 168

1. Family tie 2. Accommodation tie 3. Work tie 4. Spending more than 90 days in the UK during either of the two previous years 5. Country tie

Answer 169

For a person who has been resident in any of the three previous tax years (normally someone leaving the UK), all five UK ties are relevant For a person who has not been resident (normally someone arriving in the UK), the first 4 UK ties are relevant

Answer 170

Domicile of origin Domicile of choice Deemed domicile

Answer 171

Determined by the country of birth of the father Illegitimate children or those born after the death of their father take their mother’s domicile The domicile follows that of the parent until they reach the age of 16

Answer 172

Physically residing there An expressed intention to stay there Buying a house there Establishing a business or getting a job Acquiring citizenship or nationality there Making a local will Having family, friends or business interests there

Answer 173

If the individual no longer lives in the ‘new’ country Intends to live elsewhere permanently If a domicile of choice is abandoned, the individual’s domicile will revert to the domicile of origin

Answer 174

They are resident in the UK for at least 15 out of the previous 20 tax years (deemed domicile will apply from the 16th year)

Answer 175

Income tax is charged on worldwide earned income and investment income CGT is charged on worldwide chargeable gains

Answer 176

No UK income tax for any employment income or profits made outside the UK Employment income or profits made within the UK is still subject to UK income tax There is no liability on overseas investment income or income from British Government securities

Answer 177

Non-residents are not usually liable to CGT unless they are only temporary non-residents Any individual who leaves the UK must be a non-resident for more than 5 years for disposal of assets acquired before leaving the UK to be CGT free

Answer 178

Individuals domiciled outside the UK but are a UK resident can elect to be taxed on a remittance basis There is remittance if you have foreign income or proceeds from foreign gains and bring them directly or indirectly to the UK so you or a relevant person can enjoy the benefits in the UK

Answer 179

Non-residents are not usually liable to CGT unless they are only temporary non-residents Any individual who leaves the UK must be a non- resident for more than 5 years for disposal of assets acquired before leaving the UK to be CGT free

Answer 180

Once a non-domicile becomes resident, they can elect to pay tax on the remittance basis without paying any charge Once resident for 7 out of the previous 9 years, they will be taxed on the arising basis unless they pay an annual charge of £30,000 This becomes £60,000 for individuals who have been resident in the UK for at least 12 out of the previous 14

Answer 181

If the individual is under 18 Where unremitted foreign income and gains are less than £2,000 for the tax year The charge can be avoided by not claiming the remittance basis for any particular year

Answer 182

Gains on UK assets are automatically subject to CGT Gains that arise outside the UK are taxed on the remittance basis, where the claim is made

Answer 183

Individuals neither domiciled or resident in the UK are only subject to:  Income tax from any UK investment or employment income  IHT on gifts of assets situated in the UK  No CGT to pay unless in relation to property

Answer 184

If an individual has income and gains from a source in one country and are resident in another, they may be liable for tax in both countries A double taxation treaty is designed to reduce the total tax payable where one transaction would produce a tax liability in two different countries

Answer 185

If there is one UK resident trustee

Answer 186

It is a tax on land transactions Paid by the purchaser within 14 days of the ‘effective date’ of the transaction, normally the completion date Solicitors normally complete the forms

Answer 187

For residential land and property, the 0% band now stops at £500,000 until 1st July 2021 and up to £250,000 till 30th September 2021

Answer 188

First-time buyers do not pay SDLT on purchases of residential property costing under £300,000 Purchases between £300,000 and £500,000 SDLT at a rate of 5% is paid on excess over £300,000 No relief if property’s purchase price exceeds £500,000

Answer 189

SDLT is charged for residential leasehold property at 1% of the present value of the lease, if it exceeds £125,000

Answer 190

SDLT is charged for non-residential leasehold property at 1% for leases between £150,001 and £5m, then 2% on anything above this

Answer 191

No, SDLT is not payable on any of the purchase price attributable to interiors left by the seller

Answer 192

If the property is a second home or purchased with the intention of letting it out, then there is 3% surcharge for each band

Answer 193

An SDLT rate of 15% is charged on the entire purchase price where companies and collective investment schemes buy residential property with a value over £500,000

Answer 194

Up to £150,000 – 0% £150,000-£250,000 – 2% Anything over £250,000 – 5%

Answer 195

Stamp Duty is levied on the purchaser of shares, not on their sale Stamp Duty is payable on documents (such as stock transfer forms) that transfer ownership of shares, stocks and unit trusts

Answer 196

Charged on all electronic transactions at 0.5% and rounded to the nearest penny

Answer 197

Charged on paper transactions at a rate of 0.5% and rounded to the nearest £5 Stamp duty is only charged on transactions in excess of £1,000

Answer 198

Share transactions for companies listed on growth markets (AIM and NEX Exchange) and UK domiciled Exchange Traded Funds (ETFs)

Answer 199

Yes, it’s the acquisition cost and therefore can be deducted on calculating chargeable gain on any subsequent disposal

Answer 200

Each pays SDLT on the market value of the property acquired

Answer 201

Exempt, 0%, 5% and 20%

Answer 202

Input VAT – VAT payable on goods and services purchased Output VAT – VAT payable on goods and services sold Businesses can offset input VAT against output VAT and pay excess to HMRC and reclaim any excess VAT paid

Answer 203

Usually quarterly

Answer 204

Businesses must register for VAT if the value of taxable supplies in the previous twelve months is more than £85,000 The trader has 30 days to notify HMRC

Answer 205

Purchases of motor cars, unless wholly used for business purposes and business entertainment expenses

Answer 206

Businesses will become registered from the first day of the second month after exceeding the limit

Answer 207

If a business makes zero-rated supplies, they do not charge VAT on supplies, but can still reclaim input VAT Most food and drinks (not catering), domestic supplies of water and sewage, books and most other publications (hardcopy and electronic), sales of new residential buildings, public transport, drugs and medicines for the disabled, clothing and footwear for children, women’s sanitary products

Answer 208

Exempt items do not come into any VAT computation and will not be included in the input or output amounts Zero-rated items will be included in both input and output amounts

Answer 209

Where a business makes exempt and taxable supplies

Answer 210

Allows small businesses to account for VAT as a percentage of their taxable turnover Flat rate percentage used varies according to the main trade sector in which the business works Only for businesses with a maximum taxable turnover of £150,000

Answer 211

Simplified administration and possible reduction in VAT payable

Answer 212

Margin schemes are used by dealers in second-hand goods Second-hand dealers only account for VAT on the difference between the price paid for an item and the price at which it is sold, rather than the full selling price

Answer 213

If taxable supplies are less than £1.35m a year – can join cash accounting scheme Output VAT is only due to HMRC when the customer has paid for the goods or services rather than when they are invoiced This helps with cashflow for small businesses and if the customer defaults on the debt

Answer 214

Traders can usually claim a VAT refund if debt owed by customer is at least 6 months overdue and it has been written off in business accounts

Answer 215

Normally VAT returns submitted, and VAT paid every 3 months i.e., quarterly If a business regularly reclaims VAT from HMRC they can submit and pay quarterly

Answer 216

Making Tax Digital (MTD) Unless annual accounting is used, returns to be submitted under MTD by 7th day of the month after the month following VAT period

Answer 217

At the time of importation

Answer 218

Paid by companies on their trading profits, investment income and chargeable gains

Answer 219

For most companies, corporation tax is due and payable 9 months and one day after the end of the accounting period

Answer 220

Loss relief must be reclaimed within 2 years Trading losses can be offset against other income Excess losses can be carried back to profits of preceding 12 months Losses must be set against current accounting period before they can be carried back Any remaining losses are carried forward and relieved

Answer 221

Quarterly A large company is one with profits over £1.5m

Answer 222

One that is controlled by 5 or fewer shareholders Or by its shareholder- directors regardless of their number

Answer 223

Yes, but there is a tax charge Without a tax charge, participators could enjoy income from their close company without paying any income tax on it

Answer 224

If their central management and control is exercised in the UK

Answer 225

Cash deposits Gilts and other fixed-interest securities Individual properties Individual shares or equities

Answer 226

Individual savings accounts (ISAs) Collective investments Life assurance policies Pensions

Answer 227

Up to £5,000 of savings income can be taxed at the starting rate of 0% Only applies if savings income falls within first £5,000 of taxable income after deducting reliefs and allowances

Answer 228

Pays interest monthly at a variable rate Interest is taxable No withdrawal notice necessary Available from 16 years old Minimum £500 and maximum £1m or £2m if joint

Answer 229

Pays prizes rather than a fixed return Monthly prizes range from £25 to £1m and are tax free Prizes can either be paid or reinvested into premium bonds Minimum £25 and maximum £50,000

Answer 230

Fixed rate of interest either paid monthly (income) or reinvested (growth) Interest is taxable as savings income

Answer 231

Variable interest is credited annually on 5th April and is tax free Minimum opening deposit £1

Answer 232

They are exempt from CGT Losses are not allowable Income taxable as savings income and therefore PSA can be used

Answer 233

Effectively loans to the government Pays a fixed rate of interest twice yearly Interest is paid gross but is taxable (can elect to have 20% income tax deducted at source) Gilts can be held till maturity or sold for a on stock exchange

Answer 234

Effectively loans to companies Interest is paid gross but is taxable as savings income Bonds traded on the stock exchange If qualifying corporate bond, then free of CGT

Answer 235

As investments, shares offer income in the form of dividends, and capital growth if they are sold at a profit By investing in collectives (unit trusts, OEICs and investment trusts)

Answer 236

Dividends paid gross Everyone has £500 dividend allowance After which:  Basic rate taxpayers – 8.75%  Higher rate taxpayers – 33.75%  Additional rater taxpayers – 39.35%

Answer 237

Where a company offers shareholders the choice between receiving cash dividends or new shares Shareholder treated as having received income equal to the cash dividend (taxed in the same way)

Answer 238

A limited company that invests its shareholders’ money in other shares Investment trust’s shares are listed on stock exchange and investor can sell at any time Taxation of income and gains is the same as for shares Interest distributions are treated as savings income

Answer 239

Default basis is the cash basis – where the rental income does not exceed £150,000. The landlord can opt for accruals basis After this accruals basis used

Answer 240

No, the income is classed as investment income and not earned income Therefore, it does not count as ‘relevant earnings’ for pension contributions (except for furnished holiday lets)

Answer 241

£1,000 If property income is more than £1,000, then £1,000 can be claimed against income – instead of deducting actual expenses

Answer 242

Repairs and maintenance are allowed but alterations or improvements are not Interest payments on loans for the purpose of property letting. Tax relief for finance costs is restricted to a basic rate tax deduction, e.g., if finance costs were £1,000, the reduction in tax bill is £200 (£1,000 @20%). Restriction does not apply to furnished holiday lettings or nonresidential property

Answer 243

Letting income is taxable in the year it arises Accounts must be prepared for the actual tax year, although HMRC usually accepts accounts to 31st March instead of 5th April Tax paid via self-assessment along with income from other sources

Answer 244

If a lease is granted for less than 50 years, then part of the premium paid (an upfront amount) is treated as rent and must be included in the property income accounts

Answer 245

A sum paid by landlords to induce potential tenant to take out lease The tenant is taxable on the premium

Answer 246

When landlords provide substantial services in connection with the letting, then letting income can be taxed as trade income Advantages include:  More scope to set off losses  Counts as relevant earnings for pension contributions  CGT rollover and holdover relief

Answer 247

Disposal of let property is liable to CGT Rollover relief, holdover relief and business asset disposal relief may be available where the letting amounts to trade

Answer 248

Any part of the home that is let is not covered by the exemption If letting relief available, the chargeable gain that would otherwise arise on the let part of property is reduced by lowest of:  £40,000  Amount of gain exempt because house is main residence  Gain attributed to the let part or period of letting

Answer 249

Applies to people who let part of their only or main residence Up to £7,500 rental income tax free If income is over £7,500, landlords have 2 options:  Be taxed on the normal basis (income less expenses)  Be taxed on the amount that exceeds £7,500 with no deduction for expenses

Answer 250

Furnished and let on a commercial basis Available to public for at least 210 days in the year Should be let for at least 105 days Not let on a continuous basis of more than 155 days in any tax year

Answer 251

Profits generated are exempt from income tax IHT can be postponed until the trees are cut and timber sold, as long as owned for 5 years CGT exempt

Answer 252

Tax relief on contributions Tax free growth and income within the fund Up to 25% of the fund tax free on retirement (remainder of the fund on retirement is subject to income tax but not NICs) Death benefits are tax free where the deceased member was aged under 75

Answer 253

Employees and self-employed people under 75 receive tax relief on contributions up to 100% of their earnings Combined employer and employee contributions up to an annual allowance of £60,000 People with little or no earnings can contribute up to £3,600 a year and qualify for basic rate tax relief

Answer 254

Any unused part of annual allowance from previous 3 tax years can be carried forward and added to the annual allowance for the current tax year

Answer 255

Lifetime limit of £1,073,100 25% of the pension fund The earliest age at which most people can start taking their retirement benefits is 55

Answer 256

Members of occupational defined benefit schemes usually receive a scheme pension paid by scheme itself Investors in defined contributions schemes (e.g., personal pensions) can either purchase an annuity or receive capped/flexi-access drawdown

Answer 257

Investments in residential property and tangible assets trigger a tax charge Borrowing to fund an investment cannot exceed 50% of the net value of the fund Pension funds are free of UK tax on investment income and chargeable gains

Answer 258

To invest in a stocks and shares ISA, an innovative finance ISA or a lifetime ISA, the investor must be 18 or over Individuals aged 16 and 17 can invest in a cash ISA (remember £100 rule)

Answer 259

Available to all children who did not get a CTF Parents, family and friends can contribute up to £9,000 for 2020/21, and for parents the £100 rule does not apply Money is locked away for the child, who can withdraw the proceeds when they reach 18

Answer 260

Must be an individual who is:  Resident in the UK; or  A non-resident Crown employee working overseas or the spouse/ CP of such an employee

Answer 261

Various types of ISA. Generally individual savers can invest in one of each type of ISA (cash ISA, stocks and shares ISA, innovative finance ISA) subject to overall limit of £20,000 Up to £4,000 of £20,000 limit can go into a lifetime ISA

Answer 262

It is possible to transfer assets between all types of ISA without losing tax-free status All providers must allow investors to transfer out, but they are not obliged to allow transfer in

Answer 263

Executors can register it to be a continuing ISA, this means it maintains its tax-free status whilst in the estate until it is distributed to beneficiaries

Answer 264

Additional Person Subscription (APS) ISA benefits can be passed to spouse/CP via an additional ISA allowance The surviving spouse/CP can invest as much as their spouse/CP used to have invested, plus their own annual allowance

Answer 265

Children born between (31/08/02 – 01/01/11) Government used to provide an initial voucher of between £50 and £250. A further £9,000 a year can be added until the child’s 18th birthday Since been replaced by JISAs (CTF accounts can be transferred into a JISA)

Answer 266

Investment trusts, unit trusts, OEICs and ETFs Can be bought and sold by individual investors or within other tax wrappers, including pensions and ISAs

Answer 267

Funds investing in corporate bonds/gilts (interest distributions) will be classed as savings income and will qualify for PSA and 0% band Interest distributions are paid gross, after PSA, taxed at 20%, 40% and 45% Distributions from equity funds are classed as dividends. These are also paid gross and taxed in the same as holding shares directly

Answer 268

Generally set up in countries where there is little or no taxation, e.g., Channel Islands and Isle of Man

Answer 269

Reporting status is granted if fund reports full details of income to HMRC UK investors are told of their share of fund’s income, so they can include it on self-assessment No requirement for fund to distribute income UK investors subject to income tax on their share of fund’s income (whether it is distributed or not)

Answer 270

Income accumulates normally within the fund Income is not taxed as it arises, only on disposal of units/shares Gain on disposal (including death) is calculated on CGT principles without CGT allowance, but it is subject to income tax on the year of encashment Therefore, gain is liable to be taxed at 20%, 40% or 45%. The PSA, dividend allowance and the starting rate can be used

Answer 271

Income is accumulated in a low tax environment so can grow faster Investor can roll up income and take profits when they are a lower rate taxpayer/non-taxpayer If non-UK resident income and gains are tax free For UK residents who are not UK domiciled, income and gains not remitted to UK escapes UK tax liability

Answer 272

Offshore funds investing in equities will be subject to non-reclaimable withholding tax on dividends Fixed-interest funds are usually the most tax efficient, as they choose investments such as Eurobonds and exempt gilts, where income is paid gross

Answer 273

Life policies with regular level premiums payable at least annually and for 10 years minimum. An individual’s annual premium limit is £3,600 If a policy is qualifying the original policyholder will never be subject to personal tax on the proceeds

Answer 274

Single premium investments, usually taken out primarily as investments (e.g., investment bonds) rather than for life cover All gains from non-qualifying policies are taxable

Answer 275

Fund pays tax at 20% on interest income, rental income and offshore income UK dividends exempt from tax If fund sells any assets, gains taxed at 20% These taxes are paid directly by the life office and cannot be reclaimed by the policy holder if they are a nontaxpayer

Answer 276

Policyholders subject to income tax on policy profits Gains are called ‘chargeable gains’ even though they are not subject to CGT Qualifying policies are more favourable because only gains arising within the first 10 years are taxable

Answer 277

Death (if it gives rise to the payment of benefit) Maturity Surrender or certain part surrenders Assignment for money or money’ worth

Answer 278

On maturity or surrender  If amount paid out (plus any earlier capital payments) exceeds the premiums paid plus previous chargeable gains On death  If surrender value immediately before death (plus any earlier capital payments) exceeds the premiums paid plus previous chargeable gains

Answer 279

Possible to withdraw 5% of the original investment without incurring an immediate tax charge, this can be carried forward Any excess is chargeable in the year of withdrawal for higher/additional rate taxpayers It is not tax free because when the plan is encashed, all previous withdrawals have to be added to the gain for the final tax calculation

Answer 280

If the gain falls in basic rate tax band – no tax is due If gain falls fully in higher rate tax band – taxed at 20% If gain falls fully in additional rate tax band- taxed at 25% N.B. Non-taxpayers cannot reclaim this tax Top slicing relief is available if a gain straddles 2 tax

Answer 281

Life office has to issue a certificate to policyholder Certificate states the amount of chargeable gain and allows investor to complete their self-assessment

Answer 282

Life assurance bonds set up outside the UK No tax within the fund so the growth should be better than an onshore bond May be withholding tax (non-reclaimable) When a chargeable event occurs, a UK policyholder is liable to income tax at the highest rate on whole gain PSA and 0% band available

Answer 283

If policy holder has been non-resident for some part of the life of the bond the gain is reduced Time apportioned by dividing the number of days they were resident by number of day’s policy has run

Answer 284

Offshore life offices must appoint a UK tax representative if they have UK resident policyholders They are responsible for issuing chargeable event certificates

Answer 285

Taxed on profits made on writing overseas business Not taxed on income and gains from investment in OLAB funds (they should grow faster than ordinary UK funds) OLAB is only with non-UK residents

Answer 286

They can sell qualifying policies with limited premiums (£270pa or £25/month) where the funds are free of UK tax on investment income and capital gains Known as exempt policies

Answer 287

They provide investment returns linked to performance of equity investments, e.g., FTSE100, with some element of the return protected or guaranteed Returns are achieved by a combination of a deposit or fixed-interest investment and a derivative of the chosen index

Answer 288

A contract to pay a given amount (the annuity) every year

Answer 289

Growth products generally provide a guaranteed minimum return Income products (no longer very common) provide a fixed income and the return of capital at the end of their term

Answer 290

Purchased life annuity (PLA) Capital and interest element Compulsory purchase annuity All income is taxable as non-savings income Immediate needs annuity Paid directly to care provider and there is no income tax

Answer 291

Special purpose vehicles Shares in listed property companies Real Estate Investment Trusts (REITs) Insurance company property funds Property unit trusts and OEICs

Answer 292

Usually a limited partnership or exempt UK unit trust or investment trust, which is setup to finance specific projects Efficient from a tax standpoint as they allow investments to be made from SIPP, SSAS and registered charities

Answer 293

Must be closed-ended UK resident company and listed on a stock exchange To be exempt from corporation tax:  75% of the company’s total gross profits have to originate from property  Rental income must exceed 125% of interest borrowings

Answer 294

Payment from tax exempt element Payments are paid net of 20% income tax and treated as UK property income Dividend payment from non-exempt element Provides dividend income for the investor REIT gains subject to CGT in the normal way

Answer 295

The values of units are linked to the underlying properties No gearing They can be held through regular and single premium life assurance policies

Answer 296

They are all designed to help new start-up companies raise capital by giving significant tax breaks to the investor

Answer 297

Income tax relief of 30% on qualifying investments up to £1m (£2m if KI). This is given as a tax reducer. Tax relief will be clawed back if shares disposed of within 3 years Shares also free of CGT if held for 3 years Investing can also defer CGT liability from previous gain if that money was invested into EIS shares

Answer 298

Similar to EISs but target smaller start-ups Income tax relief is given at 50% on first £100,000 (shares must be held for 3 years) Shares also free of CGT if held for 3 years If investor has a CGT liability on disposal of another asset, 50% of this can become exempt if invested into EIS shares

Answer 299

Both EIS and SEIS shares qualify for Business Property Relief at 100% if shares held for 2 years, and 50% relief if held for between 1 and 2 years

Answer 300

30% income tax relief on first £200,000 (given as a tax reducer). Shares must be held for 5 years otherwise relief is clawed back Dividends from VCTs up to £200,000 per tax year are tax free Shares are exempt from CGT immediately, but no reinvestment relief is offered

Answer 301

Company cannot have gross assets over £15m prior to investment (£16m after) Company cannot have been trading for more than 7 years Must have permanent establishment in UK Must be unlisted when EIS shares issued Fewer than 250 full-time employees (500 for KI)

Answer 302

Company must have been trading for less than 2 years Cannot have gross assets over £200,000 Fewer than 25 full time employees

R03 Flashcards

(334 cards)