Chapter 11 Flashcards
What are the main forms of personal taxation?
Income Tax
CGT
IHT
What is the usual way to establish residency in the UK?
the number of days a person spends in the UK in the tax year
To establish residency in the UK under the Statutory Residence Test (SRT), a person is subject to which three tests?
The Automatic Overseas Test
The Automatic UK Test
The Sufficient Ties Tets
How does the automatic overseas test work?
how many days a person spends in the UK
For the automatic overseas test, how does someone become automatically a non-UK resident? 🗓️👷
- spent fewer than 16 days in the tax year
- they work full time abroad (avg at least 35 hours a week) and spent fewer than 91 days in the UK for the tax year
What is the automatic UK test? (2)
- person spent more than 183 days in the UK for the tax year
- their only home was in the UK
When is the sufficient ties test used?
when automatic overseas test or automatic UK test did not apply
What is included in the sufficient ties test? (5)
family tie
accommodation tie
work tie
90-day tie
country tie
For the sufficient ties test, what is included in the family tie?
spouse, civil partner or minor children
For the sufficient ties test, what is included in the accommodation tie? (1)
accommodation in the UK
available to use for at least 91 days
spend at least 1 night there
For the sufficient ties test, what is included in the work tie? (2)
work in the UK for more than 3 hours a day for at least 40 days in total
employed or self employed
For the sufficient ties test, what is included in the 90-day tie?
more than 90 days in the UK in either of the last two tax years
For the sufficient ties test, what is included in the country tie?
spend more days in the UK in a tax year than in any other single country
applies to leavers only
For the amount of UK tie needed, how many days has a person spent in the UK?
at least four
at least three
at least two
at least one
16-45
46-90
91-120
Over 120
Under SRT, what is splitting the tax year?
a UK part charged UK tax as a UK resident
an overseas part, they are charged UK tax as a non-UK resident
What is a domicile country?
the country where someone has, or which someone treats as their permanent home, whether they live there or have a substantial connection with it
For UK doms, are their global properties liable for IHT?
Yes
For non UK doms, are their global properties liable for IHT?
No, UK properties only
What are the four types of domicile that can apply in the UK?
domicile of origin
domicile of choice
domicile of dependancy
deemed domicile
What is the domicile of origin?
acquired at birth
take on that of their father
What is the domicile of choice?
individual move to a new country with intent of living there permanently
What is the domicile of dependency?
a child under the age of 16 adopts the same domicile as the parent
What is deemed domicile?
domiciled outside the UK but
domiciled in the UK during the three years before transfer or resident in the UK for at least 15 of the 20 previous income tax years
What is arising basis of taxation?
pay UK tax on income as it arises and gains as they accrue
Is foreign income/gains that have already been taxed in the country in which they are located subject to tax in the UK?
Yes, but relief is given under the provisions of the relevant double taxation agreements
How can someone claim relief under a DTA?
by completing a self-assessment tax return
What happens in a remittance basis? 2
UK tax for UK sour income and gains as they arise or accrue
only account for UK on foreign income or gains when they bring (remit) them into the UK
If an individual is a resident, but not domiciled in the UK, they can use which remittance basis?
both foreign income and foreign capital gains
If an individual is a resident and domiciled in the UK, but not a tax resident, they can use which remittance basis?
can use a remittance basis for foreign income
foreign capital gains will be taxed on the arising basis
If an individual has less than £2,000 unremitted foreign income and/or gains which arise or accrue in the relevant tax year, can they use the remittance basis?
Yes without making a claim and retain entitlement to UK personal tax allowances and reliefs
Some reliefs are also available, whereby taxpayers can deduct an amount from their tax liability before calculating their final liability. What are these? (3)
personal allowance
contributions to a personal pension plan or a company pension scheme
gift aid donations
Non-dividend savings income applies to the UK and overseas savings income from which sources? (5)
- Interest from banks and building societies.
- Interest from gilts and corporate bonds.
- Purchased life annuities (income component).
- Taxable amount on deeply discounted securities (eg, zero-coupon bonds).
- Some distributions from unit trusts (5)
How much is the personal allowance reduced if income is over the £100,000 limit?
reduced by £1 for every £2 over the limit until personal allowance is fully exhausted
e, if a bond is issued at £80 and redeemed at par of £100, the £20 discount on the issue is treated as…
if it were interest
Any receipts under an annuity are divided by HMRC into which two elements?
interest element
capital being returned
. The interest element from annuities is included in?
taxable income
How is the capital element of an annuity calculated?
estimated by dividing the initial capital sum invested by the investor’s life expectancy
For rental income, The tax payable will be based on the investor’s net income profit from the activity, which is:
total rental income less total allowable expenses
The Gift Aid scheme applies to what?
any donation made to a registered charity, whether large or small, regular or one-off
