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R03 - Personal taxation > 22/23 Set 3 > Flashcards

22/23 Set 3 Flashcards

1
Q

What is the tax position on a company paying Relocation and Removal expenses for you?

A

The first £8,000 is tax free and everything thereafter is charged as employment income

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2
Q

If you contribute to a company car, how is it treated when calculating the taxable benefit?

A

Any contributions up to £5,000 are deducted from the list price of the car when calculating the taxable benefit. Everything thereafter is ignored.

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3
Q

How are class 2 NICs “calculated and collected”?

A

Via. “Self-Assessment”

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4
Q

How are class 4 NICs calculated and collected?

A

Via. “Self-Assessment”

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5
Q

If you overpaid Class 1 NICs in employment, and then underpaid your Class 4 NICs as self-employed in the same tax year, how does HMRC solve the discrepancy?

A
  1. The overpayments will be used to correct any underpayments first
  2. Anything left over will be repaid to her
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6
Q

If you overpaid Class 1 NICs in employment, and then underpaid your Class 4 NICs as self-employed in the same tax year, how does HMRC solve the discrepancy?

A
  1. The overpayments will be used to correct any underpayments first
  2. Anything left over will be repaid to her
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7
Q

When is IHT due to be paid by the legal personal representatives of a deceased individual?

A

Six months after the end of the month in which the death occurred

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8
Q

Non-domiciled individual resident in UK earns income in UK for that period. What is the remittance basis situation?

A

Doesn’t apply as the income is made in the UK it is subject to usual UK taxation

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9
Q

What is the balancing payment?

A
  • The payment due on 31st Jan
  • Contains an adjustment calculated by comparing the tax paid with the tax due
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10
Q

What is included in the balancing payment?

A
  • Class 2 NICs
  • Balance of Income Tax
  • Balance of Class 4 NICs
  • CGT outstanding
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11
Q

What is the flat rate scheme for VAT?

A

A scheme allowing SMBs to account for VAT as a % of their taxable turnover (rather than the difference between input VAT & output VAT)
- It is restricted to low cost small businesses

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12
Q

What is the primary advantage of the flat rate scheme?

A

Lower administration involved

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13
Q

If you won an award of £1,000 for 25 years’ service, what is the Income Tax position?

A

It would be tax exempt because you can win an award of up £50 for every year’s service tax-free under a long service award (+20 years).

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14
Q

Charles (HRT) makes the following contributions:
19/20: £0
20/21: £15,000
21/22: £20,000

What is the max contribution he can make in 22/23?

A

£85,000

You may contribute up to £40,000 p/a and may carry up to 3 years remaining allowances. However, you must contribute at least £1 in each year you would like to carry forward. Hence, he can only combine 20/21, 21/22, and 22/23. The rest follows,

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15
Q

Ryan has held an onshore investment bond for 5 and a half years. How many years of 5% withdrawals does he get? How many years of top slicing does he get?

A

6 years of 5%
5 years of top slicing

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16
Q

What is a local authority bond?

A

Loans to local government authorities at a fixed rate of interest

taxed same as corporate bonds

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17
Q

Does a corporate bond pay interest for an open or closed ended period?

A

Closed ended

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18
Q

Do you get the capital back from local authority bonds at maturity?

A

Yes, if it is bought at issue and held to maturity.

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19
Q

What is the condition for a house to be considered a ‘furnished holiday let’ for tax purposes?

A

It must be available for commercial let for at least 210 days in total per tax year

20
Q

Who pays the High Income Child Benefit tax charge?

A

The higher earner

21
Q

How is the High Income Child Benefit tax charge calculated?

A

If the higher earner earns over £50,000 p.a. (adjusted) then they are charged 1% of the benefit amount for every £100 their income exceeds the allowance.

22
Q

Additional rate beneficiary of an IIP trust gets £2000 in interest. What is the tax liability?

A

He owes £625

He must have paid 45% on the gross amount. As it will have been paid net of basic rate tax it must be grossed up (£2,000 / 0.8 = £2,500) and then the 45% taken from that (£1,125). Since 20% (£500) is already paid, he owes £625.

23
Q

What is the primary condition of a bereaved minor trust?

A

The beneficiary must be given absolute interest in the trust property at 18

24
Q

What reason might a director not choose to go for a high dividend low salary income?

A

Because dividends are not deemed to be relevant earnings, your pension contributions are limited to the low income

25
Q

What are the two main conditions for the “normal expenditure out of income” exemption to apply?

A
  • Must be regular
  • Must be from income
26
Q

What is the principal private residence exemption?

A

It’s the rule that means you don’t pay CGT on your only residence

27
Q

When can the principal private residence exemption apply to trusts?

A

When the beneficiary has an interest in possession in the property.

28
Q

What kind of contributions can increase your BR tax band?

A

Pension contributions and Gift aid charity contributions

29
Q

At what income does your PA start to reduce?

A

£100,000

  • Every £2 above this reduces your PA by £1
30
Q

Charles has an income of £115,000: what are his bands?

A

£15k over the £100k threshold so PA is reduced by £7.5k

0 - £5,070 : 0%
£5,070 - £42,770 : 20%
£42,770 - £115,000 : 40%

31
Q

When selling a buy to let house, which of the following costs are deductible from CGT purposes:
- legal fees
- estate agent fees
- plumber repairs

A

Legal & Estate Agent as Plumber will have already been deducted from the rent.

Ongoing / repair costs don’t get double deducted

32
Q

The earliest age you can take a pension is:

A

55

33
Q

Under the identification rules used for calculating CGT on shares of the same type and class acquired at different times, how are the shares grouped?

A
  • Acquisitions on the same day
  • Acquisitions in the share pool
34
Q

With equities held within discretionary trusts, what two figures are used to calculate the gain?

A

The acquisition cost and the market value

35
Q

With regards to discretionary trusts, when can holdover relief be clawed back by HMRC?

A

If the settlor subsequently gains an interest in the assets

36
Q

43 revisit set 3 22/23

A

43 revisit set 3 22/23

37
Q

What is the contribution limit on Friendly Societies?

A

Maximum monthly contribution of £25

38
Q

What is the CGT position on friendly society policies?

A

They are exempt

Because they’re friendly…?

39
Q

What is the Income Tax position on friendly society policies?

A

They are exempt

Because they’re friendly…?

40
Q

Which principle is Inheritance Tax based on?

A

The ‘loss to the estate’ principle

41
Q

Joint life 2nd death policy under discretionary trust, how are premiums taxed (IHT specifically)?

A

Premiums are classed as transfers of value, however they would usually come under the normal expenditure exemption

42
Q

What conditions must a company satisfy to qualify for EIS investment?

A
  • Must have a permanent establishment in the UK
  • It must be unlisted
  • Must be fewer than 250 full time employees
43
Q

Unit trusts - shares or units?

A

Units

44
Q

OIECs - shares or units?

A

Shares

45
Q

Dividends from UTs and OEICs are paid…

A

Gross

46
Q

Trust expenses (IIP) are set against which type of income first?

A

Dividend

R03 - Personal taxation (11 decks)

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