Af1 Flashcards
What are the sufficient ties 5
- spouse, civil or minor child
- working 40 days or more in UK
- in UK more than 90 days or more in this or prev tax year
- has accommodation not let out
- spending more time in UK than any other country
Furnished holiday let
- income can count as relevant for pension
- available 210 days
- let 105 days no longer than 31 single
- such periods no longer than 155 days
- uk
- entrepreneurs relief at 10%
- income tax relief on borrowing
- business relief 100% if she dies
Married but intestate
- spouse receives chattels
- spouse receives £270k absolutely
- then half remainder
- then to children
Discretionary trust income tax on beneficiary
- income carries 45% tax credit
- based on personal rate
- trustees liable for difference in tax pool
- if under 18 subject to parental settlement rules
Order of bankrupcy
- Secured creditors
- expenses in bankruptcy
- preferential debts such as pension payments or remuneration employees
- creditors with floating charge , debentures
- unsecured debts
- interest on debts
- debts to spouse
VCT eligibility and qualifying investment
- closed ended company
- listed on any stock exchange in EEA
- income from shares / securities
- 80% in unlisted trading companies
- not more than 15% in one company
- at least 10% of any investment must be in ordi ary shares
- at least 70% of investments must be in ordinary shates
- must not invest in something with assets of 15mi ll or more before or 16 after
- max can be raised from qualifying conpany is 5mil / 10mil
- company less than 7 years old / 10 years from turnover exceeding 200k
Bankruptcy circumstances
- owe at least £5k to one or group
- creditors prove debtor unable to pay / complied with stat demand CCJ - 3 weeks
- apply online
- official receiver takes control of assets
- OR investigates and reports to creditors and decided to arrange a meeting 10 % to vote for insolvency prac as trustee TIB
- No meeting OR is trustee
- 21 days to notify inheritance/42 days to be paid from executors
Duties of court of protection
- decide if a person has capacity to manage own affairs
- makes declarations re financial / welfare matters
- appoint / remove deputies atyorneys
- hearing cases re LPA or EPA
Domicile conditions
- take fathers or mother if illegitimate children
- uk domicile if resident fir 15 out of 20 tax years
- can elect to be treated as UK for IHT
Quick succession relief
(Tax paid x net)/ gross x %
REITS
- income paid net of 20% tax in exempt
- profits from ring fenced property business is exempt for corporation tax
- profits for remainder is taxed
- gains are subject to CGT
- at least 75% comes from property letting
- 90% profits paid out to investors within 12 months
- interest must be covers by 125% of rental income
- must be uk tax resident company
- listed on stock exchange inc AIM
- closed ended company
- not a close company
How HMRC calculate tax code
- employer supplies HMRC with info
- base personal allowance over 2/3 years
- assume earnings continue
- if no p allowance K tax code used to add to taxable income
- P11D
State pension
- Based on NI contributions
- min 10 years max 35
- 1/35th of state per year
- pay class 3 to top up
- claim NI credits
- defer at least 9 weeks
- 1% increase for every 9 weeks
- child benefit till child age 12 would count as years
Discretion trust tax on trustees
£1000 standard rate 7.5 % / 20 % 38.1% / 45% CGT £6,000 Expenses can be relieved Must make sure enough in tax pool 30% of trust charge 20% = 6% 10 year Exit x/40 3 month periods x effective rate Stamp duty add 3% Cost are grossed up
Chattels exemption
CGT
£6,000 based on proceeds
Cannot exceed 5/3 of over 6k
Over 15k cant use
Bankrupcy - home
- interest and right to sell pass to TIB
- TIB obtains order for sale
- minor children must wait 1 year
- has 3 years to deal or reverts to bankrupt
- trustee must - realise interest, order of sale, charging order, deal with bankrupt
SIP or SAYE
Sip Free of nic and taken from gross May offer free shares Must hold for 5 years Dividend income free of tax if new shares Cgt on disposal or not if sold imm
Saye Net pay No dividends Tax free bonus Cgt if option is taken unless goes into isa within 90 days
Deed of variation
- over 18 sound of mind
- must refer to intestacy or will
- signed by current beneficiary
- executed within 2 years of death
- mist state it is ti effect iht as deceased
- no consideration for monies worth
Conditions of lasting power of attorney
- both need to be over 18
- not bankrupt
- mental capacity
- on prescribed form
- must state info has been read and understand duties
- no fraud / pressure
- witnesses independently
- reg with court if protection / office of public guardian
- fee £82
- inform relevant people
VAT
- notify hmrc if taxabke supplies over 85k in rolling 12 months
within 30bdays of the end of the month - if expected to be above within next 30 days must notify before end
- could register anyway
- input can be offset against output
-digital records
Conditions for entrepreneurs relief 5
- must have active role
- must have owned business for at least 2 years
- must have at least 5% voting rights
- must be trading company
- can qualify if sold within 3 years of cease trading
Holdover relief
- transfers subject to iht qualify
- acquisition cost reduced by held over gain
- must both claim it
- donee must be uk resident 6 years
- not to company
- available on trading assets
- shares not quoted on stock exchange
EIS
- 30% tax relief
- £1 / £2 mill
- can be carried back 1 Yr
- exempt after 3 years CGT
- dividends taxable
- losses can be relieved
- Initially not connected but can be director after
- no prearranged exit
- gross assets of 15mill / 16mill
- less than 7 years unless 50% ann turnover and intends to enter new product market
- uk
- unlisted . AIM included
- 250/ 500 employees
- raised no more than 5 mill / 10 mill
- can’t exceed 30% shareholding
SEED
- 50 % income tax relief
- 50% up to 100k
- can be paid director if under 30% share
- trading less than 2 years
- 25 max employees
- 50% CGT excemption
Tapered annual allowance- pension
- threshold exceeds 110k / 200
- adjusted income exceeds 150k / 240
- minimum 10k / 4K from 40k
- reduces by 2 for 1 that exceeds 150k
IHT
- must be paid by end of 6 month
- can be paid 10% per year if house lived in
- 36% if over 10% of remaining NET estate (exc residence nil band)
- transfer claimed within 2 years from end of mknth of 2nd death or 3 months from when personal representatives take over
- not affected by new relationships
Car allowance
Bonus
Include accessories
Bonus not included in pension
Hmrc fines
£100 penalty
If more than 3 months £10 daily up to 90
Further £300 or 5% at 6 months later then 12
Residency
Not
Less than 16 day or 46 if not res 3 tax years
Work elsewhere, UK less than 91 days and work less 31 days uk
Yes
183 days
Only home on uk and lived in it for 91 days in total and 30 of these in tax year
Full time work in uk
Exemption / relief on property sale
Primary residence relief
Lower of 40,000
9 months ownership
Vct tax
30 % income tax 200k
Dividends tax free
No CGT
Need to hold 5 years
Pension contributions
- personal
- company
- 100% salary
- tax relief
- increase basic band
- retain personal allowance
- corporate tax relief
- wholly and exclusively
- annual allowance/£40k
- plus carry forward
Rent a room relief
- must be furnished / not seld contained Must be used as a residence Can be a rental Part of home must not be business Must be in uk Tax allowance of £7500
CGT after death
Admin are liable for CGT at 20% Received at matket value at death Estate has full exempt amount for tax yr + 2 Losses can be carried back 3 years Holdover relief is available
self employed
Reg by 5 Oct 2nd tax year
1st year to April
2nd the full year
3rd current year basis claim back overlap
Class 2 31/1
Class 4 on account
Cgt apportionment formula
A / A+B x original cost
A proceeds of part disposed
B market value of part retained
Accumulation and maintenance trust
PET
04/2008 liable for ongoing and exit
Qualify for disabled persons trust
- unable to act independently
- any income arising or capital disposals must be applied for beneficiary benefit
- must be incaple of managing affairs based on mental health act 1983 or be eligible for dla or aa
- assets van be split
Interest in possession trust
Trustees receive income gross They are liable for 20% Beneficiary receives income net of tax Not relevant property if set up on death so no periodic or exit charges. Part of life tenants estate on death. After 2006 charges apply not in estate Pre 22/3/06 part of estate
Double taxation agreement
Tax based on country of residence
Dbl tax to prevent taxing same income
Tax paid can give credit in other country
Can be resident in more than one country for tax
Agreement made between countries
Tax in both countries
Double taxation agreement
Tax based on country of residence
Dbl tax to prevent taxing same income
Tax paid can give credit in other country
Can be resident in more than one country for tax
Agreement made between countries
Tax in both countries
Spousal bypass trust
Surviving spouse provided for via withdrawals and loans
Can choose trustees
Spouse can’t take lump sum so ensures child receives benefit on second death
Nomination forms can be changed after first death
Trustees of pension are not obliged to follow instructions
No tax if died before 75 and completed in 2 years
After 75 subject to 45% charge
Temporary non resident
Outside uk fewer than 5 tax years
CGT would be liable in the year they come back
employer loans
Less than £10000 not taxable
Official rate of 2.5%
Taxed on difference
Iva
Formal proposal to pay some or all debt Apply to court Helped by insolvency practitioners 75% of creditors to agree Creditors legally bound 5 years Can apply to court to prevent bankruptcy Costs less than bankrupt No restrictions Closely involved
Remittance basis
Resident 7/9 tax years £30k
Resident 12/14 tax years £60k
Not counted if unremitted less than £2k
Only income brought in would be taxable with no allowances
