Corportation Tax, IHT & CGT Flashcards
What it is Corporation tax
Charged on net income / after relevant allowances & expenses paid
Different rates for different levels of profits
Taxes against profits earned by business during taxable period (investments, trading, gains)
Small - large company margin level charges
Outline capital gains tax
Tax on profits / chargeable asset disposed of if increase in value & gain is made by chargeable person
Dispose - sell, given away, transferred, exchanged, compensation (insurance when destroyed)
Charitable assets subject to;
- buildings
- land
- Personal possessions over £6000
- shares or securities
Annual exemption amount - overall gains above threshold pay CGT on excess / if below = nothing
Loses can be offset against chargeable gains made on others
Must complete self assessment tax return
Assets not subject to CGT
Persons main residence
Money formed part of persons income for IT purposes
Personal belongings below £6000 when sold
Special investments
UK gov bonds/ gifts
Wasting assets / chattels - limited life & decreases in value over time
Leaseholds / gifts to nation & between spouses
Gambling proceeds
Compensation for injury at work inflicted
Who pays CGT
UK residents
UK residents trusts
Non residents trading in U.K. through branches
UK residents liable on worldwide capital gains
-UK residents non domiciled are liable for gains arising from disposing uk assets & those foreign gains remitted back to the U.K
Civil partnerships
- gift tax is free
- splitting Estate makes use of tax rates
Deciding if assets are uk or foreign
Land: buildings - physical location
Chattels - moveable between countries
Debts - creditor location
Parents & trademarks - where registered
What is IHT
Charged on persons estate when they die / estate must be valued over certain threshold
=nil rate band
Levied on value of net assets inherited
Dependent on deemed domicile
Paid my executor / personal representative using funds from estate
IHT sometimes payable during persons lifetime (settled trust IHT is payable at 1/2 rate)
Estates must be valued including all assets (even jointly owned) - costs & debts deducted including household bills & funeral expenses
Outline exempt transfers for IHT
Spouse / civil partner exempt living in UK permanently
Qualifying charities
National institutions (national trust / heritage)
UK Policy parties (meet criteria)
Each person allowed to Make gifts worth up to certain value each tax year
Small gifts & regular gifts (£250 Any person)
Gifts for marriage
Outline potentially exempt transfers
Gifts free from IHT providing donor lives 7 years after making transfer - 7 year rule
Gift wasn’t gift of reservation whereby donor retains interest in asset / benefit or control
Gifts reduce level of tax liability at time of persons death
Outline chargeable lifetime transfers
Gifts into discretionary trust with 25% paid by donor
IHT liability will rise if estate valued over nil rate band
Taper relief applied if person dies beteeen 3-7 years after making gift / payable tax reduces on sliding scale based on time of gift given & date of death / not payable after 7 years
Persons estate includes assets at time of death & assets given away 7 years prior death
