Basics Flashcards

Question

What is business asset disposal relief and how is CGT taxed that qualifies for business asset disposal relief

Answer 1

Business asset disposal relief can be claimed when an individual disposes of a business or a part of a business. The relief covers the first & 1m of qualifying gains that a person makes during their lifetime. Gains that qualify for business asset disposal relief are taxed at a reduced rate of 10%. Where the £1m lifetime limit is exceeded, those gains in excess of the limit will be subject to the normal rates of CGT. Gains qualifying for business asset disposal relief are always taxed at 10% whether or not they fall within the basic rate band.

Answer 2

Trustees are liable to CGT at 20% (28% for gains on residential property) subject to any available annual exemption - £3,000 for 2023/24. • The trust annual exemption is split by the number of trusts created by the same settlor subject to a minimum of one-fifth, i.e. £600 for 2023/24.

Answer 3

IHT is payable on transfers in excess of a nil rate band, currently £325,000 (2023/24). The nil rate band will remain unchanged at £325,000 until 5 April 2028. • The residence nil rate band (RNRB) is in addition to the normal £325,000 nil rate band, and is intended to protect, at least partially, the family home from IHT. It is £175,000 in 2023/24 and will remain unchanged until 5 April 2028. Spouses can share their NRB & RNRB equalling £1m of IHT free assets

Answer 4

Potentially exempt transfer • A PET is a lifetime transfer by an individual to another individual, a bare trust or a disabled trust. The consequences of making a PET are that no tax is charged at the date of the gift, the gift does not have to be reported to HMRC, and if the donor then survives for seven years, the gift becomes fully exempt and escapes tax entirely. Chargeable life time transfer • The most common chargeable transfers occur on lifetime gifts to trusts other than trusts for a disabled person. A CLT results in a tax charge if it takes the donor's seven-year cumulation over the nil rate band. Tax is payable at 20% on the excess over the nil rate band and there will be no further IHT to pay if the donor survives for the next seven years.

Answer 5

A reduced IHT rate of 36% applies to an estate where at least 10% of the net estate is left to charity. Net estate means after the use of NRB, RNRB and any other reducers

Answer 6

Business relief is a relief for transfers of business property. The property has to be owned for two years to qualify for relief. Relief is available for lifetime transfers and on death. A relief reduces the value of a transfer in certain circumstances, In theory, it does not remove the transfer from the tax regime. However, if relief is at 100%, the practical effect is to make the transaction exempt. The main reliefs are:

Answer 7

6 months to pay the tax

Answer 8

20% after the deduction of NRB

Answer 9

40% for excess over the NRB+RNRB, 20% on Life time transfers

Answer 10

Residence is the status of an individual in any one tax year whereas domicile refers to the country that an individual regards as their permanent home.

Answer 11

If it is not acquired through birth, one can become UK domicile through being ‘domicile of choice’ This is if they are resident (according to the usual income tax rules) in the UK for at least 15 out of the previous 20 tax years; - they are born in the UK with a UK domicile of origin and return to the UK (becoming resident) having obtained a domicile of choice elsewhere. However, for inheritance tax (IHT) purposes, an individual will only be deemed domiciled under this provision if they have also been resident in the UK in at least one out of the two previous tax years.

Answer 12

Taxpayers within self assessment have to complete a tax return showing all their income and gains. They must also pay their tax to HMRC on the set payment dates. Anyone who has tax to pay, but has not received notification to submit a tax return, must notify HMRC of their chargeability by 5 October following the end of the tax year in question. Individuals pay - income tax on all types of income; - class 2 and class 4 NICs; and - capital gains tax (CGT).

Answer 13

A 5% penalty is levied on any tax remaining unpaid more than 30 days after the balancing payment is due. If tax remains unpaid after a further five months, then another 5% penalty is charged, and again when tax remains unpaid after a further six months (i.e. eleven months after the initial penalty date). • There is a fixed penalty of £100 for any return not submitted by 31 January. • If a return is more than three months late, a £10 daily penalty will be charged for a maximum of 90 days. • If a return is more than six months late, there will be a penalty of the higher of £300 and 5% of the tax outstanding, with another similar penalty where a return is more than twelve months late. •At the twelve-month date, a higher percentage will be charged if the failure to submit the return is deliberate. Typically, where a return is more than twelve months late, the total minimum penalties will amount to: [£100 + (£10 × 90) + £300 + £300] = £1,600.

Answer 14

SDLT relief for first-time buyers Up to £425,000 = 0% £425,001 to £625,000 = 5% Anything above £625,000 is then treated as normal rates so goes back to the standard • Residential Up to £250.000 = 0% £250,001 to £925,000 = 5% £925,001 to £1,500,000 = 10% Above £1,500,000 = 12%

Answer 15

Up to £250.000 = 0% £250,001 to £925,000 = 5% £925,001 to £1,500,000 = 10% Above £1,500,000 = 12%

Answer 16

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

Answer 17

Stamp duty is payable on documents (such as stock transfer forms) that transfer ownership of shares, stock and unit trusts. An equivalent tax called stamp duty reserve tax (SDRT) is charged on the agreement to transfer shares. • The rate of stamp duty and SDRT is 0.5% of the consideration paid for the shares, whatever their value. • Stamp duty is rounded up to the nearest £5 while SDRT is rounded to the nearest penny.

Answer 18

VAT the tax on goods, this is registered for if the taxable supplies in previous 12 months or likely coming 30 days exceeds £85k The value of input VAT (the VAT on products bought by a company) can be off set against the value of VAT output by company (VAT on profits of goods sold). The excess VAT is then paid to HMRC

Answer 19

VAT is paid on imported goods however is not paid on exported goods as they are zero rated

Answer 20

Every 3 months

Answer 21

This is the method small business pays its VAT, to qualify for this they must have annual taxable turn over of no more than £150k The scheme allows small business to account for VAT at a 11% of taxable turn over instead of based off input-output VAT The main benefit is the ease of administration apparently

Answer 22

Companies earning £250k profits per annum or more pay main rate of corporation tax which is 25%, a small profits rate is charged on those earning £50k or less and the amount between is tapered based on amount Earnings Tax £50k < x 19% £50k > x < £250k ≈% £250k > x. 25% Trading losses can be relieved against other income and chargeable gains of same accounting period This is self assessed and is due within 12 months of the end of accounting period, with some larger companies paying quarterly

Answer 23

Dividends are not taxable under corporation tax as it is made out of post tax profits Loans can be taxable under the condition that they are made by closed companies to participators

Answer 24

- Cash deposits - gilts and other fixed interest investments - individual properties - individual shares and equities

Answer 25

These are things held through a ‘wrapper’ - ISA - collectives - life assurance policies - pensions

Answer 26

Government investments that can be bought easily online, telephone or post. They have several types of product and all have different tax treatments

Answer 27

They do not incur CGT generally, and losses are not allowable

Answer 28

Products like debentures and loan stocks These are effectively loans to a company with fixed interest rates over a fixed term, at which the loaned amount is then paid back at the end. So they get the interest and capital sum returned Local authority bonds are the same just generally with a shorter term

Answer 29

Income and capital gains of direct investments are taxed in the same way as collectives and mutual like UTs and OEICs Firstly everyone gets a £1000 dividend allowance no matter their tax bracket After that they fall in the regular income tax brackets, on top of any earned income I.e 8.75% basic, 33.75% higher and 39.35% additional

Answer 30

In principle the same as income tax, however it has a few differences due to its business like nature Income received is liable to income tax, expenses incurred can be offset against income, losses in year of assessment is also carried forward and set against the gains of the following year Disposal of asset may be liable to CGT however there is business asset disposal relief, hold over relief and rollover relief which may help this

Answer 31

This is also known as gift hold over relief. This relief is available when you give away business assets or shares at less than market value for the benefit of the buyer. This relief means that you do not pay CGT on the assets given depending on Business assets: •being a sole trader or having at least 5% voting rights in the company • the assets are being used in the business Shares: •shares must be from a company that either isn’t listen on the stock exchange or is your own personal company Essentially the relief gets rid of CGT on these exchanges • If holdover relief is claimed, no CGT is payable at the time of the gift, but the acquisition cost to the done is reduced by the amount of the held-over gain. This increases the amount of any gain made by the done on a subsequent disposal. • Relief is given only if donor and done jointly claim it (except where the transfer is to a trust, when only the donor makes the claim). Question Adrian transferred assets worth £150,000 into a trust, in which he has no interest. If he had sold the assets, he would have made a gain of £40,000. If holdover relief was claimed what effect would it have on the trust? Answer - There is no Capital Gains Tax at the time of the transfer, but the acquisition cost of the trust is reduced to £110,000. Rationale Incorrect. Where holdover relief is claimed, no CGT is payable at the time of the gift, but the acquisition cost to the recipient is reduced by the amount of the held-over gain. The acquisition cost to the trust is therefore £110,000 (£150,000 - £40,000). - Chapter 3, Section F2, Learning Outcome 3.2

Answer 32

This is the relief given to a business who sells an asset used in business, then purchases a new asset for the business. Relief is only allowable up to the amount sold for up until the full cost of the new item I.E if you sell an asset for £4K but buy one for £3k only £3k of the amount of the sold item is relivable, the item must be bought up to one year before or three years after the disposal of the asset.

Answer 33

- Tax relief on input - No tax on gains/ investment income accruing in funds - 25% PCLS (max of £268,275) - tax free death benefit under age 75 Employed people can contribute up to 100% of their earning to a pension scheme within £60k

Answer 34

The only investment policies on which income and gains are exempt from tax CTFs had a max contribution of up to £9k while ISAs are £20k PA CTFs can be transferred to ISAs with no issue at age 18

Answer 35

Funds can apply to HMRC to have the reporting status, this is given when the fund can show details of all its income to HMRC. Any fund that hasn’t received this status is a non-reporting fund - Equity distributions are taxable at the dividend rates (8.75% basic rate, 33.75% higher rate and 39.35% additional rate and are eligible for the £1,000 dividend allowance. - Interest distributions are taxed at 0% starting rate, 20% basic rate, 40% higher rate and 45% additional rate. The personal savings allowance (£500 or £1,000 as appropriate) is available. • Any profit on the eventual encashment is subject to the normal CGT rules and will be taxed at a rate of 10% and/or 20%. To all intents and purposes, as far as the individual investor is concerned, reporting funds are taxed in the same way as UK collectives.

Answer 36

The perceived advantage of offshore funds is that the funds should grow faster in a low-tax environment. - The disadvantages of offshore funds are that: • in the case of a reporting fund, a UK investor will have to pay income tax on income even if it is rolled up and not distributed; and - in the case of a non-reporting fund, a UK investor will have to pay income tax on the whole of the eventual profit, i.e. income plus capital appreciation.

Answer 37

Qualifying life policies are broadly life policies with regular level premiums payable at least annually for at least ten years. • Non-qualifying policies are broadly single premium policies that are usually taken out primarily as investments rather than for life cover.

Answer 38

Liable to income tax at the highest rates on the whole gain, with relief for time spent outside UK

Answer 39

The settlor given they are alive and UK tax resident

Answer 40

The enterprise investment scheme (EIS) provides tax advantages for investment in unlisted companies. Income tax relief is given at 30% on qualifying investments of up to £ 1m in a tax year (£2m if investments in excess of £ 1m are made in knowledge-intensive companies). CGT gains can be deferred if put into an EIS AIM shares often qualify for business relief meaning they don’t pay IHT **Dividends are taxable** Disposals on assets can be reinvested into a EIS can differed tax liability if the reinvestment takes place between the year prior and 3 years after

Answer 41

The seed enterprise investment scheme (SEIS) operates in a similar way to the ElS, but is targeted at smaller, start-up companies. Income tax relief is given at 50% on qualifying investments of up to £200,000 in a tax year.

Answer 42

Venture capital trusts • Venture capital trusts (VCTs) are companies broadly similar to investment trusts. • They must invest mainly in unlisted trading companies. • Individuals who are aged at least 18 can obtain income tax relief at 30% on investments of up to £200,000 per tax year in newly issued ordinary shares in VCTs. **However this relief is withdrawn if shares are disposed of within 5 years** •VCTs have to be approved by HMRC and must satisfy a number of conditions. •VCTs pay dividends tax free • exempt from CGT when disposing of VCT shares • no IHT relief • dividends up to £200k are tax free

Answer 43

The general anti-abuse rule (GAAR) is a special statutory rule that targets tax avoidance schemes that are outside the general tax legislation because they are complex or novel.

Answer 44

Children have their own personal allowances and so, can have tax-free income of up to £12,570 in 2023/24. However, income of more than £100 gross in a tax year derived from a gift from a parent is taxed as that parent's income if the child is under 18 and unmarried and not in a civil partnership.

Answer 45

- taking dividends instead of salary from a company in which they have shares and for which they work; and - increasing the amount the employer contributes to company pension schemes by salary sacrifice. they should bear in mind the possible impact on their State benefit entitlements and overall tax position:

Answer 46

These will be completely void of IHT if held for 2 years So this means that EIS, SEIS and VCTs are all exempt from IHT if held for over 2 years

Answer 47

This is the tax free amount that you can have on investment gains and interest. It is at £1000 for basic rate tax payers, £500 for higher and £0 for additional

Answer 48

Step 1 Calculate the taxable income for the year and identify how much of the gain falls within: - the starting rate for savings income; - - the personal savings allowance; and - the basic-, higher- or additional-rate tax bands, as appropriate. Any gift aid donations are ignored Step 2 Calculate the tax due on the gain across all tax bands. Deduct 20% basic rate tax (treated as paid for both UK and offshore policies) to find the individual's liability for the tax year. Step 3 Calculate the annual equivalent of the gain. The annual equivalent is calculated by dividing the gain by N. **Full surrender** For full surrender, N is the number of full policy years between the date the policy was taken out and the date of the chargeable event. **Part surrender** The general rule for UK policies is that if the gain arises from a part surrender, N is the number of full years back to the last chargeable event. So, if no chargeable events have occurred, N is the number of full years back to the start of the policy. **Offshore policies** For offshore policies, N depends on the policy date: • For pre-6 April 2013 policies, N is measured from the start of the policy. • For policies made on or after 6 April 2013 (or earlier policies that have been varied after that date): - For those individuals who have been UK resident throughout the policy period, N is based on the number of years back to the last chargeable event. - For those individuals who have not been UK resident throughout the policy period, N is measured from the start of the policy (although it will be reduced to reflect the period of overseas residence). Step 4 Calculate the individual's liability to tax on the annual equivalent. Deduct 20% basic rate tax (treated as paid for both UK and offshore policies) on the annual equivalent and multiply the result by N. This gives the individual's relieved liability. Step 5 Deduct the individual's relieved liability at step 4 from the individual's liability at step 2 to give the amount of top-slicing relief due.

Answer 49

Total amount X (VAT amount/100+VAT amount) £90,000 x (20/100+20) = £15k

Answer 50

Net pay arrangement

Answer 51

CGT is due on investments gains on the 31 January following the end of the tax year in which the gain occurs Ie gain occurs 4 May 2023 so it’s the tax year January 31 following the 23/24 tax year which would be Jan 31 2025

Answer 52

I.E dividend allowance doesn’t just get rid of £1000 from the amount it’s just at 0% so it’s still added to the income So if someone earns £42,800 PA and got dividends of £8600, the total earns income is still £51400 not £51400, this is crucial because of the amount now being taxed at the higher rate

Answer 53

10% up to £10,375 for married couples aged over 88 This is reduced by £1 for ever £2 for the net income of couple over £34,600 This is given as a reduction of the individual’s tax liability

Answer 54

Relief is given for interest paid on a loan for the purpose of acquiring shares in, or making a loan to, a close trading company. **• Relief is at the borrower's top tax rate, but is subject to the cap of £50,000 or 25% of adjusted total income, whichever is higher.** • A company is a close company if it is controlled by five or fewer shareholders, or by its directors, regardless of their number. • Relief is available if the borrower has more than 5% of the shares at the time of paying the interest. • Alternatively, relief is available for borrowers who own 5% or less of the company if they work for the greater part of their time in the management or conduct of the company's business. • A loan made to a close company must be used for the purpose of its business for the interest to qualify for relief. • No relief for interest is available if the loan is used to buy shares on which ElS relief is claimed.

Answer 55

As earned income so at 20% 40% 45% not dividend rates It also relates to the personal allowance not the dividend allowance

Answer 56

Answer Gross earned income 55,000 Less personal allowance 12,570 Taxable income 42,430 **We can extend the basic rate tax band by £4,000 (gross pension contribution). The basic rate tax band changes from £37,700 to £41,700.** £8632 total liability From earned income, the personal allowance is deducted to arrive at taxable income, which will then be taxed according to the tax band it falls into. Although Mrs Leites only paid £3,200 net to the pension provider (£4,000 minus basic rate tax relief of 20%: £4,000 x 20% = £800), the full grossed up amount is eligible for higher rate relief. This is given by extending the basic rate tax band by the amount of the grossed-up contribution, so Mrs Leites benefits from an additional £4,000 being taxed at 20% instead of at 40%. £37,700 + £4,000 = £41,700 × 20% = £8,340 The remainder of her taxable income is taxed at 40%: £42,430- £41,700 = £730 × 40% = £292. CII R03 Study Text Chapter 1, Section F & Chapter 12, Section A1, Activity 12.4

Answer 57

As earned income, so at I come tax rates. Paid gross It can also benefit from personal savings allowance But this taxable amount is relivable example of £5k annuity for a basic rate tax payer They are basic rate so get £1000 allowance off so are taxed on £4K of the annuity at 20%, meaning they have a tax liability of £800 But because this is relivable on the gross annuity amount at their basic rate of tax, they have tax relief on the full £5k. So get relief of £1000 Which means that if say someone with a £30k salary and £5k annuity, they get income tax relief on the whole income of £1000

Answer 58

For every £100 a client earns over £50k they lose 1% of the child benefit This benefit goes off the highest earner in the family and cannot be decided who’s income it’s based on

Answer 59

if an employer provides an employee with an accommodation which is worth over £75k the additional taxable benefit to the client is the property value x market rate of interest (2.25%) Example Cleo's employer provides her with rent-free accommodation. The market value of the free rent is £9,000. The employer paid £110,000 for the property. What is the taxable value of Cleo's accommodation benefit, assuming her occupation is not exempt from the tax charge? Answer £9,787.50 Detailed Explanation The taxable value of Cleo's accommodation is the market value of the free rent of £9,000 plus: 2.25% on the excess of the cost of the property over £75,000: £110,000 - £75,000 = £35,000 @ 2.25% = £787.50 £9,000 + £787.50 = £9,787.50 CII R03 Study Text Chapter 1, Section GAN

Answer 60

The clients basic rate band is expanded by the gross pension contribution amount

Answer 61

When employed by two companies both salaries will deduct the primary contribution threshold (£12570) and both with pay NICS as a salary so in effect they are both treated as individual salaries to which all NICs is chargeable on However if this combined salary was greater than the upper earnings limit (£4524 / £50270) then the client can apply for deferment. This means that one of the salaries pays NICs at the normal rate an the other just pays it at 2% above the threshold. IE two salaries of £34k = £68k so over the limit Both are reduced by lower annual limit so both = £21,430 each One is then taxed at 12% and the deferred is taxed at 2%

Answer 62

For income taxation it is not carried forward, income is taxed at a year on year basis. NICs will allow the losses of previous years to offset the gains of the next

Answer 63

Cost of purchase, fees, renovations On property any basic rate is taxed at 18% and higher + additional is at 28% Example Mr Poole bought a holiday cottage in Devon in May 2011 for £120,000. He paid £2,000 in legal fees and then spent a further £25,000 on renovations. In March 2024, he sold the property for £180,300 incurring legal fees of £2,500. Mr Poole's taxable earnings for the year are £33,700. Total amount liable to CGT is £180,300 - £120,000 - £2000 - £25,000 - £2500 Leaving a gain of £30,800 Using the CGT annual exemption we can reduce this by a further £6k So a total liability of £24,800 With a portion paid at 18% an 28%

Answer 64

This is claimed upon the sale of a business. The first £1m of gains is taxed at 10% for CGT, and is taxed at 20% there after **this is the gains, so if there are any offset able amounts such as costs or expenses then reduce it first** Example In November 2023, Mr Dawson sold the business he had run as a sole trader since April 2001., The gains on the sale were £250,300 in respect of the goodwill and £315,000 in respect of the business premises and equipment. The total value of the company is the value of the goodwill and assets combined, £565,300, this is also the total gain. As this is CGT calculation you can use the clients annual exemption amount of £6k Leaving a net gain of £559,300 As this is all under the £1m mark it is all liable to business asset disposal relief, as such it is taxed at 10% CGT Answer is £55,930 total CGT payable

Answer 65

All Chattels are exempt from CGT if **the value at disposal. I.E sale price** is less then £6k Anything above this is under the 5/3rds rule **(sale price - £6k)x5/3** Tangible movable property which is a wasting asset meaning lower life expectancy than 50 years is fully exempt from CGT this includes yachts cars etc

Answer 66

An apportionment formula is used to work out the deemed cost where a disposal is only part of the asset (A/(A+B)) x original cost A = proceeds from disposal B = market value of part retained This deemed cost is then taken from the gain to arrive at the final taxable amount To get the new acquisition cost of the remainder of the asset you just take the deemed cost from the original purchase price. Example Harold sells a quarter of a piece of land he owns. The sale proceeds were £25,000. The land originally cost him £10,000 about 20 years ago. After the sale, the remaining land is valued at £100,000. How much is the gain for CCT purposes and what acquisition cost would be used if he were to dispose of the remaining land in the future? (£25k/(£25k + £100k)) x £10k = £2k So taxable gain is £25k - £2k = £23k New acquisition cost of renaming land is £10k - £2k = £8k

Answer 67

This is relevant for the CGT on the disposal of shares or units in a unit trust. Each disposal of shares comes under one of these three identifications 1 - acquisition on the same day 2 - acquisition within the following 30 days 3 - acquisition in the share pool; this aggregates all acquisitions except those in the previous two pools Example Logan bought the following shares in the same company 500 for £0.9 each earlier today 750 for £0.8 each 6 months ago 1000 for £0.75 each 2 years ago The 500 comes under identifier 1 and so is just a gain of £25 Remainders are all within the share pool as none are in the following 30 days. This means the purchase price must be aggregated to find the average as follows. **Purchase prices of entire units in pool added together/ total shares from pool = aggregated purchase price** In this case it’s (£600 + £750)/1750 = £0.77 First 500 shares are sold from earlier today the following 1500 are from share pool and sold at £0.77 per share giving a gain of £270 Total gain then being £25 + £270 = £295

Answer 68

The annual exemption is £3,000. This means that a transferor may make lifetime transfers exempt from IHT up to a total value of £3,000 in any one tax year. If the whole £3,000 is not used in any tax year, the balance can be carried forward to the next year. For example, if James transfers £1,500 in year, one, he can carry forward £1,500 to year two and have a £4,500 exemption. • Any unused balance is lost if it is not used in the next year and that year's exemption must be fully used first. It cannot be carried forward to year three. • This exemption applies only to lifetime gifts. **this cannot be applied to the final IHT bill**

Answer 69

They are settled across 3 dates January 31st of that year July of that year and January 31st the following year The first two are an even split between the value of the previous years tax bill and the following January is the difference between that year and the next years tax bill **If the following year happens to carry a lower tax bill than the previous year, HMRC will make a repayment of the difference** Example Tax bill of £16k in 22/23 and tax bill of £20k the following year 23/24 For this clients tax payments in 23/24 First payment on 31/01/24 of £8k Second payment on 31/07/24 of £8k Last payment 31/01/25 of £4K This last payment is to make the difference between the £16k and £20k

Answer 70

'Rent-a-room' relief is available to those who let part of their only or main residence. Where gross receipts per year are not more than £7,500, the income is not charged to tax. Where the receipts are more than £7,500 it can either be taxed on the income less expenses or on the amount that the gross receipts exceed the £7,500 limit with no deduction for expenses. Example Rental income of £150/week (x 52) exceeds the limit by £300. Income received minus expenses, gives an amount of £7,000 to be taxed at 20%. The rent a room method taxes the excess over the limit only - £300 taxed at 20%. In this example, a significant tax saving - £1,340 - would be had by opting for the rent a room method.

Answer 71

These are qualifying life policies, they are taxed as income and although they are called chargeable events they actually aren’t CGT calculations and so cannot benefit from the CGT allowance They can use the 5% cumulative tax deferral as well, however this is only tax deferral not exemption, so this will have to be paid upon gain

Answer 72

they can encash for x years + 1 E.g £50k Onshore investment bond has been held for a little over 6 years This means there is 7 years of 5% tax withdrawals allowed

Answer 73

They have a capital and an interest element, the interest element is taxed as normal interest is so as income Capital element is tax free

Answer 74

Up to £250,000 = 3% £250,000 - £925,000 = 8% £925,001 - £1,500,000 = 13% £1,500,001 + = 15% **So this is just the standard band but up by 3% on each**

Answer 75

£60,000 But there is a tapered reduction for those who earn over £260,000 This reduction works at a rate of £1 for every £2 over the threshold to a minimum allowance of £10,000 Example Tariq has an adjusted income of £280,000, including his employer pension contributions. How much is his annual allowance for pension purposes in the current examinable tax year? Tariq has adjusted income of £280,000, including employer pension contributions. His tapered annual allowance is therefore reduced by £1 for every £2 in excess of £260,000: £280,000 - £260,000 = £20,000 /2 = £10,000. £60,000 - £10,000 = £50,000. CIl R03 Study Text Chapter 10, Section B1

Answer 76

50% of scheme assets, given there is no loan already in place

Answer 77

100% of this allowance can be carried forward from the past 3 years **but it is applicable to the year its from IE the past 3 years pension allowance was £40k each unlike the £60k this year** So for the previous 3 years given no pension contributions were made they could have a carry forward allowance of £40k x 3 + £60k from this year

Answer 78

The income from a bare trust for the benefit of a minor is taxed as the parent's income if that capital came from the parent and the income is more than £100 per year. If the income is not more than £100 per year, then it is taxed on the child. The rule does not apply where the capital giving rise to the income came from the grandparents or other individual. Which means it would then be taxed on the child using their allowances ClI RO3 Study Text Chapter 1, Section J2A J2B

Answer 79

Bank interest - paid gross, 20% tax due, personal savings allowance not available to trustees, Dividend - paid gross, 8.75% tax due, dividend allowance not available to trustees, Other income such as rent - paid gross, 20% tax due,

Answer 80

The following are the main exempt disposals, including capital sums derived from assets: • an individual's private residence; • private motor vehicles; • NS&I savings certificates and premium bonds; • government and most corporate bonds, and government-guaranteed securities, owned by individuals;

Answer 81

Made to either a person, discretionary trust or bare trust but doesn’t require reporting to HMRC No tax payable at date of gift and is exempt from tax completely if the donor survives 7 years after the gift In event doner dies within 7 years of gift taper relief is applied to the amount of IHT due Less than 3 years - 40% standard rate Over 3 less than 4 - 32% Over 4 less than 5 - 24% Over 5 less than 6 - 16% Over 6 less than 7 - 8% 7+ years = exempt So it goes down 20% of the IHT tax rate increments **tapered relief decreases the tax payable not the value of the transfer** tapered relief only applies to IHT when the total cumulative value over 7 years of the deceased’s transfers is over the NRB. As the PETs are taken first from the estate, so cannot be used after NRB. **the cumulation period for IHT is all within the range of 7 years from a PET, so if someone makes a PET 4 years ago from another PET made 5 years before death, even though that initial PET was 9 years ago due to it being within 7 years of another is counted in the final cumulative period** Tapered relief is applicable at the distance of the last transfer, using the above example it’s 5 years from last transfer so the £150k would be taxable at 24%

Answer 82

For every £2 they lose £1 of NRB so an estate of £2.2m loses NRB of £100k meaning their NRB would only be £225k

Answer 83

The marriage allowance allows one member of a married couple to gift 10% of their personal allowance to the other this is provided a few criteria are met - the other is not a higher rate or additional tax payer - they are married - the one donating is earning under basic rate of tax

Answer 84

Adjusted total income is total income plus charitable donations through payroll less all types of pension contributions. Income + charity donations - pension contributions = adjusted total income

Answer 85

Essentially it’s just the number given on the code followed by an L but instead of an L you always replay this with a 9. That amount is divided by 12, which gives the total amount not subject to tax each month. Using the above example it would then be 1257L = £12,579 £12,579/12 = £1,048.25 So this person is receiving £1,048.25 per month tax free

Answer 86

1. having a spouse, civil partner or minor children resident in the UK; 2. having accommodation in the UK of which use is made during the year: there is a very detailed definition of what counts as accommodation for this purpose, but generally it does not include a property that is let out, stays in hotels or short visits with relatives; 3. doing substantive work in the UK: this is defined as working for 40 or more days during a tax year; 4. spending more than 90 days in the UK during either of the two previous years; and 5. spending more time in the UK than in any other single country. If previously a resident • 16-45 days require 4 or more ties • 46-90 days require 3 or more ties • 91-120 days require 2 or more ties • 121-182 days require 1 or more ties • 183 days + is automatic residency When not previously a resident • 16-45 days auto non-residency • 46-90 days require 4 or more ties • 91-120 days require 3 or more ties • 121-182 days require 2 or more ties

Answer 87

Under regular spousal exemptions these are tax free unlimited for couples that are UK domicile, but if the one who is receiving is not UK domicile then the max amount which can be transferred for a life time is £325,000.

Answer 88

It is deemed paid net of additional rate tax, this means that if for example it was paid to a basic rate tax payer they could reclaim the difference To figure out the gross amount paid it would be amount paid/0.55 (opposite of 45%) This figure will be the gross then tax that accordingly to figure out the difference

Answer 89

This is the 5% rule, every year you can withdrawal up to 5% of the original value of the bond, this is cumulative so if not used in previous years it can be carried forward. One trick is also it counts by the year the policy is in, so if the policy is 5 years and 2 months old, that policy is in its 6th year meaning they can take 6x5% worth of the original value

Answer 90

While under £325k (NRB) they won’t pay anything, however when it does exceed the NRB it is charged at 25% Example Client makes two gifts into a discretionary trust in the same year each of £200k, the first would suffer no IHT and can also have the two years annual allowance too of £3k each so this gift was paid at £194k untaxable However on the second payment this goes over the £325k line by £69k This £69k is now taxable at 25% if the client is to pay the IHT birthday

Answer 91

They are charged on the whole value of the benefit as determined by income tax purposes, at 13.8% E.g A company car has a taxable benefit value of £6000, this will be taxed at 13.8% on the whole amount. £6000 x 13.8% = £828

Answer 92

They all have a zero rate of £967 the UEL for regular people. So they get charged 0% NICs on weekly income of up to £967 Says nothing about what they get charged after this, so I imagine if this is to be brought up in an exam they will always be under the UEL

Answer 93

• Gross assets of no more than £15m • trading less than 7 years (ten is knowledge intensive) • fewer than 250 employees

Answer 94

Small profits threshold is £6,725 No NICs contributions are due on the amount over the SPT and under the lower profits limit but they are deemed to be paid If under the SPT the person can opt to pay class 2 NICs

Answer 95

If someone has more output VAT than input, they owe the difference x VAT amount. If the output is less than the input VAT then they can reclaim this amount x VAT Output - Input if the number is positive the money is owed, if the number is negative the money can be reclaimed **Input VAT is the amount of VAT on the goods bought for a business to make their products, output VAT is the VAT on the goods then sold by that business**

Answer 96

Available for 210 days but rented for at least 105 days

Answer 97

Monthly max deposit £50, max bonus of £1200

Answer 98

The charge is a percentage of a set figure every year, this years figure is £27,800 The amount that has to be paid is the fuel benefit charge x C02 emissions amount that they pay on the car

Answer 99

- Have to be UK tax resident and structured as close ended company and are classed as AIM abc has to be listed on recognised stock exchange - exempt from corporation tax as long as 75% of the company’s profits comes from real estate and any interest on borrowing is covered by 125% - 90% of rental profits must be paid as dividend to investors within 12 months of the accounting period Can be held in an ISA Two forms of payments from a REIT 1 - payments from tax exempt elements • for retail investors this is classed as property income and paid net of 20% tax • non-taxpayers may reclaim access tax • ISA investors receive payments gross 2 - dividends from non- exempt element • taxed as a normal dividend Gains on REIT shares are subject to CGT in standard way

Answer 100

Take the G/km minus 55 then divide this number by 5, then add that figure to 16 to get the taxable % on the list value of the car. This amount cannot go above 37% Remember the fuel tax bit too with the fixed amount £27,800 taxed at the same rate the car is. I.E Mr Stevens is an employee of GH Enterprises. In addition to his gross salary of £36,000 in the current tax year, he is provided with a petrol company car with a list price of £22,000 and a CO2 emission rate of 175g/km. He uses this for personal as well as business use. 175 - 55 = 120 120/5 = 24% Add this to the 16% gets 40% which is greater than the max limit of 37% So this list value is taxed at 37% as well as the standard fuel figure of £27,800.

Answer 101

Paid Net of 20% tax so when using these in calculations you have to gross up the interest amount by dividing by 0.8 They are also tax relivable so the 20% of the grossed up amount so you can take this amount from the final amount of tax paid I.E if someone has interest if £4K from life annuity the grossed amount would be £5k as divided by 0.8 and the tax relivable amount is £1k

Answer 102

NS&I bank accounts are taxable as savings income this includes investént account and direct saver (not direct ISA) NS& I savings certificates are not taxable Bonds over than the premium bond (as these technically pay prizes) have taxable interest as income

Answer 103

Effectively loans to the government Usually pay fixed rate interest paid twice a year gross as taxed savings income but this can be elected to be paid net of basic rate tax (20%) Can be sold on exchanges exempt from CGT so profits are free but losses are not allowable Accrued interest in the sale proceeds is liable to income tax if total nominal holding exceeded £5k at any point in the tax year

Answer 104

Loans to a company which bears fixed interest for a term before repaying the capital at the end of the term Interest is paid gross and is taxable as savings income Can be traded on stock exchange Could be exempt of CGT if meets the rules for qualifying conditions If the bond is transferred by any means (sale,gift etc) if the price is higher than the purchase price minus the sale of acquisition the profits are taxable as income

Answer 105

Loans to local governments at fixed rate of interest usually relatively short with capital being repaid at maturity Interest is paid gross then taxable as savings income Qualifying corporate bonds as such exempt from CGT Can be traded on stock exchange

Answer 106

Limited company that invests money in other stocks and shares Investors buy shares of the IT becoming a part owner Generate dividends through the invested shares which in-turn creates dividends for the investors, can also be sold on stock exchange creating a CGT. Interest distributions on the shares are taxed as income - dividends taxed as dividends - sale taxed as CGT - interest on shares taxed as income

Answer 107

Through a stock broker, as such this is done electronically and so SDRT is payable

Answer 108

An annual £1,000 property allowance means that property income is exempt if it is less than £1,000 (before deducting expenses). If property income is more than £1,000, then the £1,000 allowance can be claimed against income - instead of deducting actual expenses.

Answer 109

Repairs and maintenance - repairs are allowable but not renovations/improvements Interest - there is tax relief for loan costs in respect of property, this means any loans/mortgage taken out against the property. **These are allowable at 20% of the full loan amount.** This doesn’t apply to furnished holiday lets or non-residential properties Others - fees - utilities when paid by landlord - costs of services provided by land lord such as cleaning and gardening

Answer 110

Landlords can claim a deduction for the replacement of furnishings in a residential dwelling. The deduction is available for capital expenditure on furniture, appliances (including white goods) and kitchenware. This can cover the full cost of an equivalent item, if the new item shows an improvement above moderate reason on the old item then the difference between cost of old and new is taxable **The cost of renewing fixtures that are an integral part of the building, e.g. baths and toilets, is deductible as a repair to the property, so is not covered by the relief.**

Answer 111

Prepared for the tax year but can accept to 31 March instead of april 5th

Answer 112

- Rollover relief, gain can be rolled over against the cost of a new business asset - Holdover relief, If a property is the subject of a gift and has been used for furnished holiday letting or for letting amounting to a trade, holdover relief can be claimed. The donor then pays no CGT on the gift and the donee usually takes over the donor's CGT base cost. - business asset disposal relief, up to £1m of assets can be charged at CGT 10%, this is a life time limit which applies to the disposal of business

Answer 113

Must be - furnished and let on commercial basis - must be available to public for let 210 days out of the year and must be let for at least 105 of those days - occupancy must be continuous for 31 days minimum but not more than 155 days - doesn’t require being in recognised holiday resort Advantages - income from this is eligible to be pay pension contributions unlike other property incomes - CGT roll over relief, holdover relief and business asset relief is available Disadvantages - compliance my be onerous

Answer 114

This is a tax paid on foreign investments that pay dividends and income, the book doesn’t give a rate of tax but does say that it’s unreclaimable

Answer 115

If the company makes profits of less than £250,000 then they can be taxed at the small profits rate of corporate tax - First £50k is taxed at 19% - Anything over that but under £250k is taxed at 26.5% This is instead of the standard rate of corporation tax 25% This is on the whole companies profits I.E Company makes £120k profits in a year then also sells an asset for a chargeable gain of £50k, the full £170 is liable to tax.

Answer 116

when savings income falls within the first £5,000 of taxable income (income in excess of reliefs and allowances). Income tax is charged first on non-savings taxable income, then on savings income and lastly, on dividend income. Therefore, if non-savings taxable income exceeds £5,000, the starting rate of 0% for savings income will not apply. Savings income refers to • Interest; • the interest element of purchased life annuity payments: and • gains from life assurance contracts. I.e Julie has eared income of £13,000 and interest from savings of £6,000. She has no other income or reliefs. How much income tax, if any, will she pay on her savings interest? Because this amount falls within the first £5000, £5000 of this amount is tax free, a further £1000 is also tax free due to personal allowance meaning this £6000 is tax free. This leaves just the amount of the £13 which is over the standard rate band to be taxed which is £430 at basic rate of 20% Answer is £86

Answer 117

• tax relief on the input; extends the basic rate band • freedom from UK tax on chargeable gains and investment income accruing within the fund; • freedom from tax on up to 25% of the fund at retirement, with remaining fund subject to income tax under pay as you earn (PAYE) - but not National Insurance contributions (NICs); and • tax-free death benefits when the deceased member was aged under 75.

Answer 118

Yes, the retirement age is 55, but you can take your private pension (as opposed to state) at this age and continue working

Answer 119

Quick succession relief is available where property in the deceased's estate had passed to them by a chargeable transfer in the five years before the death. The tax charged on death is reduced by a percentage of the IHT paid on the earlier transfer. Not more than a year = 100% relief 1 - 2 years = 80% relief 2-3 years = 60% relief 3 - 4 years = 40% relief 4 - 5 years = 20% relief ((Tax paid on first transfer x net transfer)/ gross transfer) x relevant % I.E William died leaving his entire estate to his friend Sarah. The estate was worth £400,000, on which inheritance tax of £34,000 was paid. Sarah has just died, 18 months after William, leaving an estate worth £650.000. How much quick succession relief is available? d. £24,888 (£34,000 x (£400,000-£34,000))/ £400,000 The above then x 0.8 = the quick succession relief available

Answer 120

Maximum PCLS is 25% of whatever the at the time life time allowance is for pension contributions. Currently this is £1,073,100 and so is 25% of this which is, £268,275

Answer 121

These issue special classes of shares and are based in offshore financial centres, • Income is treated as dividend income. Subject to the £1,000 dividend allowance: - basic-rate taxpayers are liable to 8.75% tax; - higher-rate taxpayers are liable to 33.75% tax; and - additional-rate taxpayers are liable to 39.35% tax. • Chargeable gains are subject to CT in the normal way. • The investments can be held in ISAs.

Answer 122

Fixed-term contracts typically issued by UK or EU banks. • The income is taxed as savings income so any available part of the £5,000 starting rate band for 2023/24 can be used against the income, which will be taxed at 0%. - The personal savings allowance is then available. This is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. - After that, basic-rate taxpayers are taxed at 20%, higher-rate taxpayers at 40% and additional-rate taxpayers at 45%. • Chargeable gains are subject to CGT in the normal way. • They can be held in an ISA.

Answer 123

The automatic overseas tests determine if a person is automatically not UK resident. The following individuals will always be treated as non-resident: An individual who is in the UK for fewer than 16 days in the tax year. • An individual who was not resident for any of the previous three tax years and is in the UK for fewer than 46 days in the current tax year. • An individual who works full-time overseas (defined as an average of at least 35 hours a week either on an employed or self-employed basis), provided they: - are in the UK for fewer than 91 days in the tax year; and - spend fewer than 31 days in the taxlyear working in the UK (a working day is defined as any day where more than three hours of work are carried out).

Answer 124

If there is a double taxation treaty with the country concerned, it usually gives relief by making the foreign tax a credit against the UK tax. This could eliminate UK tax if the foreign tax is higher. Sometimes the treaty might determine that the gain is only taxable in one country.

Answer 125

UK residents that are domiciled outside the Uk may be taxed on the remittance basis on income arising from outside the UK. Remittance basis means that they are only taxed the the income that has been remitted to the UK. UK remitted income has to be both - used for the benefit of a UK relevant person - the considération is used for the uk person

Answer 126

This is for people who claim remittance basis For people who have been resident in the UK for - 7 out of 9 tax years = £30k - 12 out of 14 tax years = £60k The above charge is a tax charge on the unremitted foreign income left outside UK and is paid in addition to tax paid on remitted income This can be avoided by choosing not to be taxed on remittance basis, and therefore being taxed on all worldwide income

Answer 127

allow individual investors to participate in a large portfolio of shares with many other investors. They can be bought and held by individual investors or within other tax wrappers, including pensions, ISAs Products • investment trusts • unit trusts • OEICs Features - These are open ended as opposed to closed ended such as Investment trusts, meaning shares can always be bought - Usually an initial charge and annual management charges (AMC) Taxation - dividends are taxed in the normal way, with dividend allowance - income is taxed as savings income, with the personal allowance - gains are liable to CGT and losses are allowable

Answer 128

Many institutions market offshore investment funds, with the underlying funds in equities, fixed-interest stocks, commodities or currency trading. funds typically have an OEIC structure The average offshore fund can look very similar to its UK counterpart and may even have virtually identical underlying investments. For tax purposes, offshore funds are divided into reporting and non-reporting funds.

Answer 129

Reporting Fund reports all details of income to HMRC, making it a reporting fund. - Taxation subject to tax on the funds at the regular rates as a UK collective • Equity distributions (dividends) are taxed at dividend rates • Interest distributions are taxed at regular income tax rates • profits from encashment is subject to regular CGT Non-reporting funds Essentially just anything that hasn’t obtained reporting status - Taxation • income is left to build up in the fund, not taxed as it arises like in a UK collective • the only tax that will be paid on this will the on the gain, which is taxed differently. It’s taxed all as income tax rates (20,40,45) but isn’t allowed the annual exempt amount. Meaning any accrued income from interest will also be taxed at this rate.

Answer 130

45p per mile for 10,000 then 25p per there after

Answer 131

They are not taxable

Answer 132

• Income arising from UK property is taxable whether UK resident or not Income from overseas property is taxable if property business by UK resident • • UK property is pooled, overseas property is pooled • Accounts for property letting are drawn up to 05/04 or 31/03 • Accruals basis used, unless income before expenses £150,000 or less when can use simplified cash basis (can opt out) • Property allowance - if property income less than £1,000 (before expenses) then it is exempt from tax and does not need to be declared. If greater than £1,000, then can claim the allowance against the income in lieu of deducting actual expenses.

Answer 133

• Includes purchased life annuities and gains from life assurance contracts • UK resident - income taxable regardless of source (inside or outside UK) • Non-UK resident - taxable only if source is inside UK • Taxed on income received during tax year • No deductions allowed • Bank, building society, NS&l, interest distributions from UTs/OEICs, gilts, local authority bonds, corporate bonds all paid gross • Basic rate tax (20%) deducted at source from other sources including interest eleme of PLAs • Non-taxpayers and starting rate taxpayers (i.e., those with taxable savings income falling within the £5,000 0% band) can reclaim Gross income required on tax returns, so gross up interest from net amount • (Multiply by 1.25 or divide by 0.8)

Answer 134

This is £5000 that employers get tax free on NICs contributions class 1, so they have a 0% band annually of £5k

Answer 135

Disposal between two connected people ie family, this is seen as not arms length and so the value of the asset disposed is taken as market value not the value transferred at for taxation Example Peter sold a property to his brother Paul for £100,000. Paul is a connected person and the market value of the property was agreed to be £120,000. Peter therefore used disposal proceeds of £120,000 to calculate his gain. Paul also uses £120,000 as his acquisition cost of the property.

Answer 136

This is a dividend which is paid in the form of additional shares instead of did cash, the shares acquired in this way are. Treated as new acquisitions

Answer 137

(A/A+B) X C A = proceeds of part disposal B = market value of part retained C = original cost

Answer 138

• Principal private residence • Private motor vehicles • NS&l savings certificates and premium bonds • Government and most corporate bonds (owned by individuals) • Shares in VCTs

Answer 139

50% of reinvested capital gains exempt providing they also qualify for income tax relief. This is different from the 100% relief you get from a EIS. Both are just deferred until the sale of the asset

Answer 140

• Use HMRC real time CGT service, report by 31 Dec in tax year after gain made, tax paid by 31 Jan following • Or report to HMRC via self-assessment and pay by 31 Jan following end of tax year • Residential property sales - payment on account due within 60 days of completion for properties (where nof exempt as a private residence)

Answer 141

On the balancing payment on the 31st of January which is following the tax year they pertain to Ie for tax year 22/23 they will be paid January 31st 24

Answer 142

• 7-year DTA to cover tax due if die within 7 years • 7-year LTA to cover used NRB during 7 years Downside, lose control of asset, but if use trust may be CLT and subject to lifetime IHT

Answer 143

• Not exempt or potentially exempt Most common is gifts into trust • Tax charge if 7-year cumulation exceeds nil rate band **• 14-year rule - go back 7 years from CLT to establish NRB available on CLT** **• 20% charge on excess over nil rate band (25% if paid by donor)** • On death tax is recalculated using value of gift and 7-year cumulation at date of transfer • Tax at death rates will apply retrospectively to transfer • Taper relief is available • Credit is given for tax paid at date of lifetime transfer • No refund will be given if too much tax was paid during lifetime • Periodic charges every 10 years - maximum 6% of value in excess of available NRB • Exit charge usually based on last periodic charge

Answer 144

For transfers of business property owned for 2 years Non-qualifying assets - businesses wholly/mainly dealing in securities, stocks and shares or land and buildings/property subject to binding contract of sale 100% relief on interests in unincorporated businesses/ shareholdings in AIM 50% relief for controlling shareholdings in fully listed companies/land/buildings or plant/machinery wholly or mainly used in connection with company controlled by transferor

Answer 145

Includes agricultural land, crops, and farm buildings, but not animals or equipment Relief given on agricultural value but not any development value 100% relief for owner occupied farms 50% relief for land let under tenancies (100% relief if tenancy exceeds 12 months) If agricultural and business relief are both available, then agricultural relief given first

Answer 146

Within 6 months of the end of the month in which death occurred So February 12th would be August 31st

Answer 147

31 Jan following the end of tax year concerned for online 31 October following the end of the tax year concerned for via paper

Answer 148

• 31/01 in tax year (half of previous year's liability) • 31/07 after end of tax year (half of previous year's liability) • Balancing payment 31/01 after end of tax year (adjustment to reflect actual liability due compared with amount paid on account) Balancing payment includes CGT, class 2 NICs and any student loan repayment

Answer 149

2% surcharge on non-Uk residents on residential property over £40k

Answer 150

On purchase of shares, stocks and unit trusts At rate of 0.5% rounded to nearest £5 for non electronic and nearest penny for electronic Not payable on transactions under £1000 Not payable on growth market shares IE AIM These are incidental costs and are deducted from CGT gains

Answer 151

Rate of 15% on whole purchase prices if valued over £500k

Answer 152

Their £1000 band is taxed at 8.75% and then rest taxed at 39.35%

Answer 153

9 months and a day from the end of the accounting period

Answer 154

No unless traded on stock market

Answer 155

£3600 per annum

Answer 156

• No tax on dividend income • 20% tax on rental, interest, offshore income • Gains taxed at 20% (indexation relief up to December 2017 only) • Paid by life office • Cannot be reclaimed by policyholder, therefore less tax-efficient for many than collectives (especially non taxpayers)

Answer 157

• Income tax on policy profits • Gains referred to as chargeable gains • But not subject to CGT

Answer 158

• Net pay method - contributions deducted from pay before calculating tax • Relief at source - contributions net of 20% tax (higher relief claimed from HMRC)

Answer 159

What - trustee act as nominees for beneficiary who is absolutely entitled to the assets Income tax - beneficiary liable to tax at their given rate Capital gains - taxed on beneficiary IHT - gift to trust is a PET so taxed as

Answer 160

What - eligible to anyone with one of the range of state disability benefits, or to a bereaved minor Tax - all taxed at beneficiary’s rate Option to do a ‘joint election’ where tax of beneficiary and trustees are calculated then the smaller is taken from the bigger. Gifts - PETs

Answer 161

What - one or more beneficiaries has the right to the income arising in trust Income tax - savings and dividends both taxed at lowest limit, 20% & 8.75%. - no personal allowances CGT - 20% tax and half CGT annual allowance (£3000) which is split between all trusts created up to min of £600 IHT - PETs pre 2006 and CLT post 2006

Answer 162

What - where no beneficiary has an immediate right to the income arising from the trust, it’s the trustees discretion who the beneficiary are Income tax - no PSA but they do have a £1000 trust allowance where income or dividends are taxed at the lowest rate then after all other income taxed at highest rate, the band is divisible by the amount of trusts set up by settler up to min of £200 CGT - get half the CGT exemption split between trusts after that taxed at 20% up to £600 min IHT - gifts are CLTs so 20% over nil rate Tax from distributions can be reclaimed of basic rate as they are charged at 45% so basic can get 25% back higher 5% additional nothing

Answer 163

Payroll gifting is essentially a pay-cut for tax purposes, as the gift is paid from gross pay, providing income tax relief at marginal rate immediately.

Answer 164

INCOME REMEMBER THIS

Answer 165

Taxpayers can amend their returns at any time in the period ending twelve months after 31 January following the tax year.

Answer 166

The equity in the house, so if the house is worth £200k and has a £125k loan in it then the RNRB is £75k as that’s the amount