6 - Taxation in the UK

Question 1

What is the are the basic, higher and additional tax rates for income tax?

Answer 1

20%, 40% and 45%

Question 2

What are the Basic, higher and additional income tax brackets?

Answer 2

Basic - £0 - £37,700
Additional - £37,701 - £125,140
Higher - £125,140 +

(0-5000 savings rate 0%)

Question 3

What are the dividend rates of income tax?

Answer 3

Basic: 8.75%
Higher: 33.75%
Additional: 39.35%

Question 4

What are the basic higher and additional savings income allowances?

Answer 4

Basic: £1000
Higher: £500
Additional: 0

Question 5

What savings income instrument pays NET? (20% already deducted)

Answer 5

Corporate bonds

Question 6

Dividend allowance ?

Answer 6

£1000

Question 7

Tax on discretionary trusts - what is the general trust rate for all other income (not dividends) over £1000?

Answer 7

45%

Question 8

Tax on discretionary trusts - what are the rates of income tax on discretionary trusts for the first £1000?

Answer 8

Dividend income: 8.75%
All other income (property, savings, trading) 20% BRT

Question 9

What class of National insurance contributions do employees pay?

Answer 9

Class 1 on earnings

Question 10

What class of NIC do employers pay?

Answer 10

Class 1a: if employee receives taxable benefits
Or
Class 1b: PAYE

Question 11

What class of NIC do self employed people pay?

Answer 11

Class 2 or 4

Question 12

What class of NIC is voluntary contributions?

Answer 12

Class 3

Question 13

What are the CGT rates on chargeable assets?

Answer 13

BRT: 10%
HRT/ART: 20%

Question 14

What are CGT rates for non-residential property?

Answer 14

BRT: 18%
HRT/ART: 28%

Question 15

What assets are exempt from CGT?

Answer 15

A persons main home
Lottery & betting wins
Uk government stocks (gilts) and most corporate bonds
ISAs
Private cars
NS&I savings certificates
Shares under EIS or SEIS
Foreign currency for personal use

Question 16

How much is the annual CGT exemption?

Answer 16

£6000

Question 17

Can capital losses be brought forward indefinitely to set against future gains?

Answer 17

Yes, only if they are claimed in the same tax year

Question 18

What is the nil rate Band and IHT rate on excess?

Answer 18

£325,000 and 40%

Question 19

Can any unused nil rate be transferred upon death?

Answer 19

Yes the % can be to a spouse or civil partner (anything below 325k)

Question 20

If a person’s estate passes to their spouse and they are both UK domicile, what IHT do they pay?

Answer 20

None even if the estate is above 325k

Question 21

What is the residence nil rate band? (RNRB)

Answer 21

Additional allowance when a home is passed to children or grandchildren at the value of £175,000 (it is combined with the nil rate band up to £500,000)

Question 22

Are wedding gifts exempt from IHT?

Answer 22

Yes, up to £5000

Question 23

If you donate at least 10% of your estate to charity what is the revised IHT rate?

Answer 23

36%

Question 24

What is a Potentially Exempt Transfer (PET)?

Answer 24

That the asset is free of IHT if donor lives on for 7 years

Question 25

What is a CLT and at what rate are they liable to IHT?

Answer 25

Chargeable lifetime transfer - 20% in excess of the nil rate band

Question 26

What exemptions are 100% exempt from IHT?

Answer 26

PETs : donor lives for 7 years after the gift Gifts to spouse/partner

Question 27

Exempt lifetime gifts? (IHT)

Answer 27

Annual exemption: £3000 Wedding gifts up to £5000 gifts to charities

Question 28

If a higher rate tax payer makes capital gains of £150,000 and capital losses of £20,000 in current tax year, carrying losses of 11,500 from previous year. Calculate the CGT payable. And is it cheaper for them to transfer half the assets to spouse as a BRT payer?

Answer 28

150k - 6000 allowance 144,000 (20,000) (11,500) =112,500 x 0.2 (HRT) = £22,500 Yes cheaper - 75k (6000) (20,000) (11,500) =37,500 x0.2 = 7500 75k (6000) = 69,000 x 0.1= 6900 Total = 14,400

Question 29

Are part A, B and C resident statuses in UK?

Answer 29

Part A - automatically non resident Part B - automatically resident Part c - sufficient ties test

Question 30

Part A resident status criteria?

Answer 30

1.Visit uk for less than 16 days 2.Non UK resident for past 3 tax years 3.Visit UK fewer than 46 days 4. Work full time overseas

Question 31

Part B resident status in uk criteria?

Answer 31

1. Present in UK for 183 days or more 2. Only residence in UK but had home for at least 91 days and lived there for 30 days 3. Full time work in UK

Question 32

Income tax/ CGT on UK resident?

Answer 32

100% on worldwide gains/income

Question 33

IHT applies to UK domicile and non-UK domicile persons how?

Answer 33

Uk domicile: worldwide assets Non uk domicile: UK assets

Question 34

UK TAX COMPLIANCE: tax returns need to be submittted by which date?

Answer 34

31st October following end of tax year for hard copy Electronic is 31st Jan following end of tax year

Question 35

what is the rate of stamp duty reserve tax (SDRT)?

Answer 35

0.5% to nearest penny

Question 36

stamp duty reserve tax is charged when an investor buys what?

Answer 36

1. Shares in a company (except for AIM shares, those listed in growth markets such as AQSE ) 2. Options to buy shares 3. Shares in a foreign company with UK Register 4. Rights arising from shares already owned

Question 37

How is SDRT charged on paperless transactions?

Answer 37

Through CREST, automatically deducting SDRT and sending to HMRC

Question 38

Stamp duty rates (physical transactions over £1000)

Answer 38

0.5% rounded to nearest £5

Question 39

What are the Stamp duty land tax (SDLT) bands and rates for residential property?

Answer 39

£0 - £250,000 = 0% £250,001 - £925,000 = 5% £925,001 - £1,500,000 = 10% More than £1,500,000 = 12%

Question 40

What are the Stamp duty land tax (SDLT) bands and rates for non- residential property?

Answer 40

£0 - £150,000 = 0% £150,001 - £250,000 = 2% More than £250,000 = 5%

Question 41

What is the anti-avoidance charge for SDLT?

Answer 41

15% on entire purchase where companies and collective investment schemes buy residential properties over £500,000

Question 42

Corporation tax is paid on what?

Answer 42

Worldwide profit and chargeable gains for uk resident companies and just UK profits for non uk companies

Question 43

What are the corporation tax rates and bands?

Answer 43

19% for companies with £50,000 profits or less 25% for companies with £250,000 profits of more

Question 44

Can trading losses be offset for corporation tax?

Answer 44

Yes, can be offset against profit and gains from the previous year and future years

Question 45

What profits makes a company a large or very large company ? And how often do they pay corporation tax

Answer 45

Large - £1.5m V large - £20m Quarterly

Question 46

How often do companies with profits less than £1.5m pay corporation tax?

Answer 46

9 months and 1 day after accounting year end

Question 47

What are VAT rates?

Answer 47

0% 5% or 20%

Question 48

What is exempt from VAT?

Answer 48

IFA arranging the sale of retail investment for a customer

Question 49

What constitutes for 0% VAT?

Answer 49

Zero-rated supplies such as children’s clothes, supplies