Topic 3 - UK Taxation 1 Flashcards Preview

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Flashcards in Topic 3 - UK Taxation 1 Deck (13)
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1
Q

What are residence and Domicile

A

Whether or not a person is liable to pay income tax, CGT or inheritance tax is based on their residence or domicile according to UK law

2
Q

Residence

A

Mainly affects income tax and CGT. A person who is in the UK for 183 days in any given tax year is a UK resident for tax purposes

3
Q

Capital gains tax

A

Tax payable on the gain when assets are sold e.g. properties

4
Q

Earned income

A

Income from employment/self employment

5
Q

Unearned income

A

Income not from employment e.g. interest, rental income

6
Q

Domicile

A

A country an individual treats as their home

7
Q

Why is domicile important

A

It mainly affects liability to IHT

If UK domicile, IHT is charged on assets anywhere in the world

If not UK, tax will be charged on UK assets only

If not UK domiciled but lived in UK for tax purposes for 15 years - deemed UK domicile

8
Q

Personal allowance

A

An allowance before I come tax is charged - allowance reduced after income threshold increases

9
Q

Income bands

A

1-Basic rate - 20% - 0 - 37,700

2-Higher rate - 40% - 37,700 - 150k

3-Additional rate - 45% - 150k +

10
Q

If income comes from different sources how is tax calculated?

A

1 - non savings income - earned income
2 - savings income - interest
3 - dividends income

11
Q

Personal savings allowance

A

Enables savers to to receive some savings interest tax free. It decreases for high rate tax payers and additional rate payers don’t get it

12
Q

How do people pay tax on their savings and investments

A

People on low income have a starting rate of 0% for the first 5K of savings income.

Starting rate band reduces as taxable non savings is received.

No starting rate where income received exceeds someone’s PSA plus starting rate band

13
Q

National insurance contributions

A

A tax on earned income, payable in different ways dependant on employed or self employed - split into 4 classes