Chapter 9 - Taxation, Investment Wrappers, Trusts Flashcards
what are the main taxes for private investors?
income tax, capital gains, stamp duty, inheritance tax
what does domicile mean?
The country that an individual treats as their home
what are the three types of domicile?
Domicile of origin, domicile of choice, domicile of dependency
How does residency affect UK residenets and non residents?
UK residents - spent 183 or more days in UK, only home is in UK
Non - spent fewer than 16 days, work abroad full time
what are the three types of income tax?
Non-saving income - earnings from employment/pension income
Saving income - interest from banks and bonds
Dividend income - dividends payable by companies and investment funds
what are the tax-free incomes
- premium bonds
- interest on national saving certificate
- ISAs
- Gambling and lottery
- dividends on ordinary shares of a venture capital trust
what is interest income referred to as and where does it come from?
Non-dividend savings income. comes from interest from banks/BS, interest from GILTS, and corporate bonds
what are the rates to know for dividend income?
2024/25 = 500
sums above = 8.75% for basic tax payers, 33.75% for higher rate, 39.35% for additional
The different national insurance
national insurance is calculated by the employers.
the different types:
Class 1 primary NICS (employee contribution)
Class 1 secondary NICS (employer contribution)
what are the main two types of state benefits?
Universal credit - benefit for working age people, paid monthly in the UK and Wales, paid fortnight by Ireland and Scotland
Job-seeker allowance - claimed by someone who looses their job
what is capital gains tax? the assets involved and exemptions?
tax on the increase in value on an asset
the assets:
- shares, unit trusts, bonds, property
exemptions:
- ISAs, property except if its main home, possessions up to 6K, gains on GILTS, lottery.
what are the charges for capital gains?
10-20% for individuals
18% and 28% for gains on properties
20% for trustee
10% for gains qualifying for business asset disposable relief
Inheritance tax what is it based on? the rate set? the exemptions?
based on the value of assets the person has when they die, known as the estate of the deceased, or what they have transferred.
Each individual will have NII-Rate, which is set at £325,000 and 40%.
Exemptions: assets left to deceased person’s spouse, assets left to charities, gifts made 7 years before.
what was created that lowered the inheritance percentage?
Financial act in 2012 lowered rate from 40% to 36% if 10% or more was donated to charity.
what is stamp duty? the different types? exemptions?
Tax paid on UK shares when a stock transfer is used.
Stamp duty reserve tax (SDRT) is payable when an individual buys shares electrically and no transfer takes place, this rate is 05.%
Exemptions = if asset is foreign, OEIC, AUT
Stamp duty land tax (SDLT) is payable by the purchaser of the land, and is calculate as percentage of value.
