Topic 4 - UK Taxation 2 Flashcards Preview

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Flashcards in Topic 4 - UK Taxation 2 Deck (17)
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1
Q

Disposal

A

Sale of an asset etc..

2
Q

How is CGT calculated

A

1- calculate the amount of gain
2- deduct annual exempt amount
3- deduct any losses from the gain
4- taxable gain is left over
5- add to taxable income to establish what rate of CGT should be paid for both

3
Q

Private residence relief

A

Available when selling your main residence

4
Q

Business asset disposal relief

A

Pay lower rate of tax

Available to business owners who own at least 5% and entitled to 5% of profits

5
Q

Roll over relief

A

Rolling over existing asset to future asset. Must’ve been bought 1 year before or 3 years after of sale of original asset

6
Q

Hold over relief

A

Gifting asset to another recipient. CGT paid when they sell - not you

7
Q

What is inheritance tax?

A

Tax charged on estate of deceased person

Charged on the amount the value exceeds the available nil-rate band at the date of death.

8
Q

Nil-Rate Band

A

Amount of your asset that can be passed down to beneficiaries free from IHT

9
Q

Residence Nil Rate Band

A

If the estate includes a residence (house) that’s being left to direct descendent, an additional (RNRB) can be applied

10
Q

Potentially exempt transfer

A

Usually a gift of an asset from a persons estate, can be subject to IHT if the donor dies within 7 years of gifting and exceeds NRB

11
Q

IHT on potentially exempt transfers

A

Death within / Tax due
1 year / 100%
2 year / 100%
3 year / 100%
3-4 year / 80%
4-5 year / 60%
5-6 year / 40%
6-7 year / 20%
7+ year / NO TAX

12
Q

Chargeable lifetime transfer

A

Gifts to companies/organisations which tax is due at reduced rate.

‘Lifetime’ tax is due when added to other chargeable lifetime transfers (past 7 years) and exceeds the NRB

13
Q

Value added tax (VAT)

A

Tax on most good and services

Businesses with high turnover may wish to register for VAT

Zero rated goods may be subject to VAT

14
Q

Stamp duty and stamp duty reserve tax (SDRT)

A

Stamp duty is payable for securities and land

Paid on paper documents that transfer ownership of financial assets and stamped by HMRC

SDRT is charged on electronic transfers

15
Q

Stamp duty land tax

A

Tax when buying a property, different thresholds apply

16
Q

Corporation tax

A

Paid by limited companies on their profits

Up to threshold - due 9 months after
Over threshold - quarterly instalments

17
Q

Withholding tax

A

Tax on income before received - mainly if non resident (sportsperson)

Aim is to make sure money is taxed before leaving country