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Level 5 Business Tax Planning > Tax Planning - The Individual > Flashcards

Tax Planning - The Individual Flashcards

(56 cards)

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1
Q

Is Tax Planning legal

A

Tax planning is legal

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2
Q

What’s HMRC view of tax planning

A

HMRC view of tax planning is that it’s encouraged

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3
Q

What are examples of tax planning

A

Examples of tax planning are: Pension contributions, gift aid

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4
Q

Is Tax Avoidance legal

A

Tax avoidance is legal

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5
Q

What’s HMRCs view on tax avoidance

A

HMRCs view on tax avoidance is, often challenged (esp. aggressive schemes)

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6
Q

What are examples of tax avoidance

A

Examples of tax avoidance are: IR35 misuse, artificial salary-sacrifice

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7
Q

Is tax evasion legal

A

Tax evasion isn’t legal

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8
Q

What’s HMRCs view on tax evasion

A

HMRC view tax evasion as a criminal offence

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9
Q

What are examples of tax evasion

A

Examples of tax evasion are: Underreporting income, falsifying records

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10
Q

What is the General Anti-Abuse Rule (GAAR) designed to conteract

A

The General Anti-Abuse Rule (GAAR) is designed to counteract “abusive arrangements” even if they are technically legal

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11
Q

Where is GAAR found

A

GAAR is in the Finance Act 2013

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12
Q

Who determines employees work

A

Employer determines an employees work

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13
Q

Who controls Self-Employment work

A

Individuals controls work with self-employment

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14
Q

What is the risk like for employment

A

The risk for employment is low as they are employee protected

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15
Q

What is the risk like for self-employment

A

The risk for self-employment is high

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16
Q

What is the tax treatment for employment

A

Tax treatment for employment are: PAYE, no deductions

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17
Q

What is the tax treatment like for self-employment

A

Tax treatment for self-employment are: Tax return, business expenses deductible

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18
Q

What are the benefits for employment

A

Benefits for employment are: Sickness pay, pension

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19
Q

What are the benefits for self-employment

A

Benefits for self-employment are: No automatic benefits

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20
Q

When does the IR35 rule apply

A

IR35 rules apply where a “disguised employee” works via a personal service to avoid PAYE

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21
Q

What are benefits in kind

A

Benefits in kind are non-cash benefits provided to employees

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22
Q

Are benefits in kind taxable

A

Benefits in kind are taxable unless specifically exempt

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23
Q

What are common benefits in kind

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A

Common benefits in kind are:
- Company car
- Fuel for private use
- Cheap loans
- Living accommodation
- Gifts, assets

24
Q

Are company cars taxable

Study These Flashcards
A

Company cars are taxable

25
What is the assessment method for company cars
The assessment methods for company cars are: - List price x CO2 emissions % (2% - 37%)
26
Is fuel for private use taxable
Fuel for private use is taxable
27
What is the assessment method for fuel for private use
Assessment method for fuel for private use is: - Set rate based on CO2% X standard figure
28
Are cheap loans taxable
Cheap loans are taxable if > £10,000
29
Are living accommodations taxable
Living accommodations are taxable unless job-related
30
What is the assessment method for living accommodations
Assessment method for living accommodations are: Annual value + 2.5% of excess if > £75,000
31
Are gifts, assets taxable
Gifts, assets are taxable
32
What is the assessment method of gifts, assets
Assessment method of gifts, assets are 20% of market value (if retained by employer) or MV at transfer
33
What are examples of tax free benefits
Examples of tax free benefits are: - Canteen - Workplace parking - Employer-paid pension contributions - One mobile phone
34
What is PAYE
PAYE (Pay As You Earn) is the mechanism through which tax is deducted from employee wages
35
What are the Key forms for PAYE
Key forms for PAYE are: - P45 - P60 - Tax code
36
When are P45s issued
P45: Issued on leaving a job
37
What are P60s
P60: End-of-year summary of income and tax
38
What do tax codes reflect
Tax code: Reflects personal allowance
39
What does the PAYE system adjust for
The PAYE system adjusts for BiKs and personal deductions
40
What must expenses be under ITEPA 2003
Under ITEPA 2003, expenses must be: - "Wholly, exclusively, and necessarily incurred in the performance of employment duties"
41
What are allowable expenses
Allowable expenses examples are: - Professional subscriptions - Mileage - Business entertainment - Tools used in the job - Use of own car or bicycle
42
What do Gift Aid donations to UK charities provide
Gift Aid donations to UK charities provide relief for higher and additional rate taxpayers
43
What are the different Pension Contributions
The different pension contributions are: 1. Occupational Pensions 2. Personal Pension Plans (PPPs)
44
What are the features of Occupational Pensions
Occupational Pensions: - Deduct from salary pre-tax - Reduce taxable income
45
What are the features of Personal Pension Plans (PPPs)
Personal Pension Plans (PPPs) - Relief via relief at source method - Contribution grossed up - Basic rate band extended by gross amount for higher rate relief
46
What is the standard annual allowance
The standard annual allowance is £60,000
47
When is Annual Allowance tapered to £10,000
Annual Allowance is tapered to £10,000 if adjusted income > £260,000
48
When was lifetime allowance abolished
Lifetime allowance was abolished in 2023/24
49
What was lifetime allowance previously capped at
Lifetime allowance was previously capped at £1,073,100
50
What are the different share incentives and options schemes
Different share options and share incentives schemes are: - Unapproved share options - EMI Enterprise Management Incentives) - Share Incentive Plans - SAYE (Save as you earn)
51
What is the tax implication for unapproved share options
The tax implication for unapproved share options are: Income tax at exercise
52
What is the tax implication for Enterprise Management Incentives
Tax implication for Enterprise Management Incentives: Preferential CGT treatment
53
What is the tax implication for share incentive plans
Tax implication for share incentive plans are: Tax-free if held for ≥ 5 years
54
What are the tax implications for SAYE
Tax implications for SAYE are: Gains exempt if held to maturity
55
How much of redundancy payments is tax free
First £30,000 of ex gratia (non-contractual) payments = tax free
56
Where is redundancy pay delt with
Redundancy pay is delt with under ITEPA 2003, Pt 6, Ch 3

Level 5 Business Tax Planning (13 decks)

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