C5 - Different Taxes And Their Implications Flashcards
Direct taxes - tax on income
Capital gains Corporation Income Inheritance Stamp duty land/reserve
Indirect taxes - tax on expenditure
Customs duties
Excise duties
Insurance premiums
Vat
Income tax
Vary on individuals income
Rate based on earned/unearned income
Earned income
Salary
Trade
Bonus
Pension
Unearned income
Bank interest
Rent
Dividend
Tax systems
Progressive
Increases as individuals darlings increase
Tax system
Proportional
Flat line regime
Jersey
Tax system
Regressive
Tax rate falls as level of income that is subject to tax rises
Corporation
Levy on profits of firm
Rates for different profit levels
Capital gains tax
Tax on profit or gain when chargeable asset disposals off
E.G land, building, shares, personal possession
Not subject to capital gains tax
Wasting income - Cars
Main residence
Gifts
Individual income
ISA
European Union savings tax directive
Resident of EU who have overseas investment. Aim enable savings income in interest payments
Foreign account tax compliance act
FATCA - US designed to limit evasion of US tax payers hiding offshore accounts by placing reporting on foreign financial institutions
Concepts of residence and domicile
Residence
You’re a non-resident for tax year if you meet any overseas tests
Automatic Overseas test
1 - resident for 1+ year, -16 days in UK in tax year
2 - not resident for any 3 tax year, spend fewer than 46 days in U.K.
3 - full time work overseas without significant break and -91 days, no days which you work +3 hrs is less than 31 days
Automatic residence test
1 - 183+ days in U.K.
2 - U.K. Home all/part time of tax year. 1 period of 91 days which you spend sufficient time and either
- no overseas home
- spend more time in UK than anywhere else
Suffice tries test
Connecting ties-
Residence Family More time in U.K. Than anywhere else U.K. Presence in previous 2 tax year Substantive work in U.K.
Arising basis of taxation
Resident in U.K. pay tax on all income as it arise
Remittance basis of taxation
Non-domicile/resident pay U.K. only tax on foreign income and gains bringing to U.K.
Domicile
Origin - birth
Dependency - until of age, domicile follows whom they’re legally dependent
choice - leave current domicile
Deemed - resident 17/20 last years
