Deck 1

Question 1

HMRC requirements for a holiday home to qualify as a furnished holiday letting.

Answer 1

1. Must be available for letting to the public for periods of at least 210 days in total in a tax year.
2. The property must be let for at least 105 days in any tax year.
3. The property must be let on a commercial basis.
4. The property must be within the UK of EEA
5. The property may be let for continuous periods over 31 days;

6 But not longer than 155 days in any tax year.

Question 2

What are the tax benefits of registering a second property as a furnished holiday let?

Answer 2

1. A Furnished Holiday Let is regarded as a trade and would, therefore qualify for Entrepreneurs Relief on disposal.
2. Earnings from lettings are regarded as qualifying earnings for pension contributions.
3. Rollover relief/holdover relief/loss relief available for CGT.
4. Business Property Relief could be available on death if qualifying period and conditions are met.
5. Income is classed as trading income, not investment income so expenses can be fully deducted from the profits.
6. Capital allowances can be claimed and losses can be used t reduce income tax.

Question 3

State the circumstances in which the loss of Business Property Relief could happen in respect of shareholdings in an unlisted company.

Answer 3

1. Company is wholly or mainly dealing in securities, stocks or shares.
2. Company primarily trades in land or buildings.
3. The business is subject to a binding contract for sale at the time of death/transfer.
4. Assets not used/required for future use in the business at the time of transfer.
5. The company becomes listed.
6. The company ceases to engage in a qualifying trade.

Question 4

State the requirements that must be met for an estate to qualify for the reduced rate of IHT due to a charitable gift and explain briefly how the net estate is calculated.

Answer 4

1. To qualify for the reduced rate if Inheritance Tax of 36%;

At least 10% of the net value of the estate

Must be left to a qualifying/registered charity/sports club association

The net value of the estate is the sum of al the assets after deducting any debts, liabilities;

Reliefs or exemptions;

And any available/transferred nil rate band

Question 5

List 3 components of an estate that will be used to calculate an estates’ qualification for the reduced rate of IHT due to a charitable gift.

Answer 5

Survivorship

Settled property/trust

General/remaining estate

Question 6

Describe the requirements for a will to be valid

Answer 6

The will must be in writing/suitable format

Signed by a testator who must have capacity/sound mind

Witnessed be at least two people in the presence of the testator

Witness and their spouses/Civil Partners cannot be beneficiaries

Question 7

What could revoke/invalidate a will

Answer 7

Making a new will

Marriage/Civil Partnership

Unless will has been specifically made in anticipation of Marriage/Civil Partnership

Destruction of the existing will (with the intention to revoke)

Question 8

How could a personal injury trust affect entitlement to state benefits?

Answer 8

The trust fund is disregarded for means testing as long as only capital is withdrawn on an ad-hoc basis

Regular withdrawals could impact eligibility

Only the amount of compensation paid should go into the trust

Question 9

What conditions must be met for a trust to qualify for the special tax regime for trusts for the vulnerable?

Answer 9

The trust property can only be applied for the benefit of the beneficiary

The beneficiary must be entitled to the income.

Question 10

According to section 89(4) of the Inheritance act 1984, what are the definitions of ‘disabled’?

Answer 10

Incapable, by reason of mental capacity within the meaning of the mental health act 1983/manging their affairs

Or

In receipt of an attendance allowance/disability living allowance/personal independence payment.

Question 11

What are the main duties of a trustee?

Answer 11

Consider the standard investment criteria and suitability of the investments.

Diversification

Obtain advice of a suitably qualified person (unless one of the other trustees has this expertise).

Investment should be reviewed at leat annually and varied if appropriate.

Manage the money and act in the best interest of the beneficiaries.

Comply with the trustee act 2000

Keep proper accounts

Consider the beneficiaries tax position/complete tax returns

Invest any cash promptly

Have a statutory duty of care when carrying out their duties to invest monies as if they were their own.

Register assets in the trust name/hold trust documents of title/trustee’s own assets.

Question 12

What is the difference between capital allowances and allowable expenses?

Answer 12

Capital Allowances;

Items that might be used in business over several years.

Generally, items that will have a useful life of over two years

Allowable Expenses;

Costs paid with the sole purpose of earning business profits.

Question 13

How is Class 2 National Insurance collected and when would this need to be paid

Answer 13

4 weekly by direct debit

Or

Half yearly

Paid on 31st Jan within the tax year and 31st July after the tax year with balancing payment on the following 31st Jan.

Question 14

How is Class 4 National Insurance collected and when would this need to be paid

Answer 14

Paid via self-assessment

Paid on 31st Jan within the tax year and 31st July after the tax year with balancing payment on the following 31st Jan.

Question 15

State Benefits that are dependent on National Insurance contributions

Answer 15

The basic state pension

Additional State Pension/S2P

Jobseeker’s Allowance, the contribution based element.

Employment and Support allowance, the contribution based element/Universal credit.

Incapacity Benefit

Maternity Allowance

Bereavement Allowance/Payment

Widowed Parent’s Allowance

Question 16

Explain how the chargeable gain on a bond is calculated on surrender

Answer 16

Onshore bonds are already deemed to have paid basic rate tax/subject to corporation tax internally.

The gain will be calculated for the full life of the bond

The gross surrender amount is added to any withdrawals made.

Minus the initial investment amount and any additional top ups.

The gain is divided by the number of whole years of ownership

The slice is added to the owner’s income for the relevant tax year.

Any amount into higher rate tax subject to 20% income tax and multiplied by the number of years of ownership.

Any amount into additional rate tax subject to 25% income tax and multiplied by the number of years of ownership.

Question 17

State the criteria a company must meet to qualify as a suitable investment to obtain financing via an Enterprise Investment Scheme

Answer 17

Gross assets of no more than £15,000,000 prior to investment and no more than £16,000,000 after.

Must be permanently based in the UK

Carrying out a genuine qualifying trade

Unlisted on major exchange when Enterprise Investment Scheme shares are issued

Raising no more than £5,000,0000 under EIS

Fewer than 250 employees

Question 18

In the event of bankruptcy, in what order of priority must creditors be paid?

Answer 18

1. Secured Creditors
2. Expenses of Bankruptcy
3. Preferential Creditors
4. Floating Charge Holders
5. Unsecured Creditors
6. Interest due on debts since the bankruptcy order
7. Debts to spouse/civil partner

Question 19

Explain the IHT implications of assigning a term assurance policy into a discretionary trust

Answer 19

The assignment of the term assurance policy into trust is a transfer of value for IHT purposes

The value is deemed to be the market value at the date of transfer.

This would be either of nil or of negligible value if the life assured is in good health.

Health problems experienced by the life assured could impact HMRCs valuation of the transfer

If the life assured dies within 2 years of the transfer the HMRC may deem the value of the transfer as being the sum assured.

The premiums are transfers of value.

They could be claimed as exempt under the normal expenditure out of income exemption or the £3,000, annual exemptions could be used.

Question 20

What actions could an individual take in order to support their application for a new domicile of choice?

Answer 20

Have a purpose for remaining there i.e family/employment/retirement

Sever all links with the UK/existing domicile

Open a bank account in the new country

Write a will in the new country

Arrange to be buried in the new country

Purchase a property in the new country

Register to vote in the new country

Apply for citizenship in the new country

Question 21

State the steps an individual would have taken to report a loss to HM Revenue & Customs (HMRC) during the time he held his UK assets, including timescales and amounts where relevant.

Answer 21

If you completed a self‐assessment tax return for the year in which you made the loss, you must claim the loss within four years from the end of that tax year.

If you did not complete a self‐assessment tax return for the year in which you made the loss, the time limit

All losses:

Loss only needs to be reported if it is more than four times the Annual Exempt Amount;

or taxpayer wishes to offset against chargeable gains.

Question 22

Explain the HMRC criteria surrounding the disposal of company assets in order to qualify for entrepreneurs’ relief.

Answer 22

Business assets must be held for a minimum period of one year.

Must be an employee of the company holding at least 5% of the shares.

The shares must be disposed of either while the company is a qualifying/trading company;

or within three years from the date it ceased to be a trading company.

Business assets include goodwill and business premises.

Question 23

Detail the five sufficient UK ties that HMRC will use to demonstrate residency, if this cannot be proved by the automatic tests.

Answer 23

Spouse, partner, children resident in the UK.

Accommodation in the UK used during the tax year.

Substantive work in the UK of over 40 days in a tax year.

More than 90 days in the UK during either of the two previous years.

More time in the UK than in any other single country

Question 24

Explain how double taxation agreements, usually operate, especially in cases where time is equally spent between countries.

Answer 24

Taxation is based on country of residence.

Residency based on where main home present; if two homes, it is the one lived in most.

Double taxation agreements are put in place to avoid double taxation of the same income.

Tax paid in one country can provide credit in the other country.

It may be that an individual is regarded as resident for tax in more than one country.

If all things are equal, an agreement will be made between the tax authorities as to who should be claiming the tax.

Question 25

Describe the CGT rules on the transfer of assets between a married couple.

Answer 25

If living together in the tax year; transfer between spouses is no gain, no loss/tax‐ free.

Question 26

Describe the CGT rules on the transfer of assets between a married couple who are separated

Answer 26

From tax year after separation, but before divorce (not living together in tax year) gain is taxable.

Treated as non‐commercial transfer between connected parties.

Market value is used as opposed to actual proceeds when calculating.

Question 27

Describe the CGT rules on the transfer of assets between two people who are divorced

Answer 27

Fully taxable, unconnected parties.

Commercial transaction/open market.

Question 28

Explain how shares are identified when they are disposed of and why this is relevant for the calculation of CGT.

Answer 28

Acquisitions made on the same day.

Acquisitions made within the following 30 days

Acquisitions made within the share pool.

To prevent ‘bed and breakfasting’;

crystallising an artificial gain/loss while maintaining beneficial ownership of the asset.

Question 29

Explain the differences in CGT treatment regarding shares acquired as bonus issues, rights issues and scrip dividends.

Answer 29

Bonus: shares in the same class are deemed to have been acquired on the same date as the original holding/all gains subject to Capital Gains Tax.

No extra acquisition cost, as they are issued free.

Rights issue: subscription for further shares as new acquisition with additional costs/Capital Gains Tax levied on excess above acquisition.

Shares will be valued at the actual purchase price.

Scrip dividends/stock dividend: dividends paid as shares and not cash.

Treated as new acquisitions and charged accordingly.

Question 30

State the factors that HM Revenue & Customs would use to distinguish whether an individual is self-employed

Answer 30

Contract to provide services.

Ability to sub‐contract.

If the individual takes on business risk.

Does individual have to correct unsatisfactory work in their own time and at their own expense?

Have to provide the equipment personally.

Question 31

State the factors that HM Revenue & Customs would use to distinguish whether an individual is employed

Answer 31

Existence of contract of service.

Set hours, holiday/sick and overtime pay.

Master/servant relationship.

Regular weekly or monthly pay /PAYE.

If individual works for just one instructor.

Equipment is provided by the company.

Question 32

Income Tax implications of gifting away a property and continuing to live in it

Answer 32

Pre‐owned asset tax (POAT) may apply/can opt for gifts with reservation (GWR) to apply.

The cash value of the benefit is based on an open‐market rent.

No tax is charged in any year in which the cash value is £5,000 or less.

Valuation date for the property is 6 April each year and it must be re‐valued every five years.

They will receive credit for any rent paid.

The recipient of the gifted property would be assessed for Income Tax on rental income received.

Question 33

Capital Gains Tax implications of gifting away a property and continuing to live in it

Answer 33

The gift would be classed as a disposal by the parents for CGT purposes;

but should be exempt under principal private esidence rules.

Any subsequent disposal by the recipient of the gifted property would potentially be subject to CGT.

Question 34

Inheritance Tax implications of gifting away a property and continuing to live in it

Answer 34

If they pay a full market rent/if they do not pay full market rent.

Gift with reservation rules will not apply/GWR will apply.

The gift is a transfer of value/potentially exempt transfers at the time of the gift.

No immediate charge to Inheritance Tax;

which may be chargeable as a result of their death(s) within seven years.

A double Inheritance Tax charge may apply as the donor will be treated as making a second gift when they cease to retain their interest in it/move out.

Question 35

Explain the steps that would need to be completed for an individual to appoint attorneys under a Lasting Power of Attorney, for property and financial affairs.

Answer 35

Must be presented on the specified form.

Registered with the Office of the Public Guardian/Court.

Signed by the Donor and Attorney.

Certified by a certificate provider.

Including the relevant payment.

Donor must have capacity when granting the power.

Question 36

Following the death of the Settlor, how long will the trustees will be expected to continue in their role under the rules concerning perpetuities and accumulations

Answer 36

Trust is subject to Perpetuities and Accumulations Act 2009.

125 year perpetuity period regardless of any perpetuity period stated in the trust.

No limit on accumulation period.

The trust can be set up for a shorter period.

Trust can be wound up/Saunders v Vautier.

Trustees can resign.

Question 37

Differences between a valid trust and an enforceable contract

Answer 37

Trustees are legal owners but beneficiaries can enforce the terms of a trust if a breach occurs - Only the parties to a contract generally have equitable/ legal rights under it

Trusts based on equity rather than common law
Beneficiaries to a trust may be unaware of the trust, parties to a contract must be aware of its items (beneficiaries must be advised of trust once they reach majority)

A contract requires consideration whilst a trust requires no consideration

Contract requires offer and acceptance

A trust can be established for a minor but a minor cannot make an enforceable contract

A valid trust requires no agreement between the settler and beneficiaries, a contract does require agreement between the parties

Question 38

Trustees

Answer 38

Can be any number

Where trust property includes land must be a minimum of 2 and maximum of 4 (unless trust corporation) (Trustee Act 1925)

Must be over 18 and of sound mind (can be a bankrupt or in prison!)

Question 39

Replacement required where existing trustee;

Answer 39

Remains outside UK for over year

Is a minor

Dies

Refuses to Act

Is unfit/incapable of acting

Desires to be discharged

Death of all trustees does not invalidate trust – trustees can be appointed by a court

Question 40

Powers to delegate to an agent

Answer 40

Trustee Act 2000 allowed delegation of powers except relating to:

Distribution over trust assets

How fees are dealt with

Appointment of new trustee

Delegation of trustee’s power

Not liable for loss due to acts of agent provided due care taken with appointment

Question 41

Breach of trust

Answer 41

Beneficiary can take legal action where they believe trustee has/will committed a breach

If court agrees, it can;

Issue injunction prohibiting intended action

Order trustee to make restitution i.e. appropriate payment to beneficiary

Order return of any trust property wrongly transferred

Question 42

When can beneficiaries to end the trust, by insisting assets distributed;

Answer 42

All beneficiaries are ascertained

No possibility of future beneficiaries

All of full age and mental capacity

Unanimous agreement of all beneficiaries

Question 43

Trusts can be created by

Answer 43

Deed – terms are expressly set out

Will

Statute

Orally

By implication – i.e. business partnership

Court Order

Question 44

The three trust certainties

Answer 44

Words – the intention to create a trust

Subject – the trust property

Object – the beneficiaries – must be certain i.e. naming/ described as a class. Wording should be precise i.e. not just say relatives.

Question 45

Perpetuities and Accumulations Act 2009

Answer 45

Applies only to lifetime trusts created and wills executed on or after 5th April 2010 and wills dated after that date

Single perpetuity period of 125 years (although can be shorter)

May accumulate income for whole of trust period

Accumulation period for charitable trusts reduced from indefinitely to 21 years

Shorter period may be chosen and incorporated in the trust deed

Where perpetuity period is uncertain trustees can execute a deed to establish a fixed perpetuity period of 100 years

Question 46

Uses of Trusts

Answer 46

Reduce Tax

In intestacy

In wills

To provide for families

To assist a charity

To provide pensions

To give property for those who cannot hold it

To provide for disabled or vulnerable people

Gain protection from creditors

Question 47

Difference between charitable trusts and other trusts

Answer 47

Charitable trust cannot be void for uncertainty of the object

Charitable trust not subject to general law on perpetuities

Charitable trust can continue indefinitely and can be varied if it becomes obsolete

If becomes impracticable – property can be applied to another charitable purpose as close to other as original – known as cy-près doctrine

Accumulate income for a maximum of 21 years

Question 48

Tax position of charitable trusts

Answer 48

Exempt from income tax and CGT provided the funds are used for charitable purposes

Disposals to charities generally exempt from CGT

Outright gifts to charities free of IHT

Reduction in rate of IHT payable form 40% to 36% if at least 10% of net estate left to charity

Gifts to charitable trusts may qualify for income tax relief (gift aid / payroll giving). Charity can reclaim gift aid

Question 49

Power of Attorney

Answer 49

Created by deed

Executed by one person giving another authority to act for them

Must be witnessed by at least one person and signed by the donor

General POA is revoked when someone loses capacity

Person of unsound mind cannot execute a POA

If donor unable to sign due to a physical disability can be signed by another but needs two witnesses

Question 50

Requirements for an LPA to be valid;

Answer 50

Donor must be over 18 and not bankrupt

Attorney must be over 18 and not bankrupt

Donor must have capacity

It must comply with the regulations made under the MCA Act 2005 – in a prescribed format

It must state that the donor and attorney have read the prescribed information and the attorney understands their duties

There must also be a certificate from a prescribed person that the donor understands the LPA and that there has been no fraud or undue pressure (Can nominate up to 5 people to be notified of registration, two certificate providers are required if no-one is to be notified)

Two forms Health and Welfare LPA, Property and Financial affairs LPA plans to amalgamate on to one form

Powers cannot be exercised until registered at OPG – can be done at any time

Property and Financial affairs LPA is effective as soon as registered (donor can stipulate powers), Health and Welfare at onset on mental incapacity (can decide aspects of care to be covered)

Question 51

Circumstances in which an LPA can be revoked;

Answer 51

By the donor whilst retaining capacity

Death of the attorney or Donor

Bankruptcy of the attorney

Bankruptcy of the donor (Welfare decisions continue)

Dissolution of marriage between donor and attorney

Incapacity of the attorney

Question 52

Bankruptcy procedure

Answer 52

Debtor (or creditor owed at least £5000, increased from £750 from Oct 2015) applies to court for debtor to be adjudged bankrupt

If court agrees debtor declared bankrupt

Control of all debtor’s assets passes to Official Receiver

Debtor submits statement of affairs to Official Receiver following a bankruptcy order

Official Receiver (OR) then decides whether or not to call a meeting of creditors to enable them to appoint an insolvency practitioner of their choice as the trustee in bankruptcy

OR must call a meeting if at least 10% of creditors (by value) demand it

Trustee in bankruptcy takes ownership of bankrupt’s property

If no trustee in bankruptcy appointed then Official Receiver acts as trustee

Trustee in bankruptcy collects all bankrupt’s property, sells it and uses it to repay creditors as far as possible

After 1 year bankruptcy usually discharged

If full disclosure not made then can be re-opened

BRO may be imposed to protect the public from bankrupts whose conduct has been reckless or irresponsible

BRO imposes restrictions which may last form 2 – 15 years after discharge

Bankrupt may be discharged in less than one year

Question 53

Restrictions placed on a bankrupt;

Answer 53

Disclose all their property to a trustee

Not conceal any debts or assets

Not destroy or falsify any records

Not make any false statements to the trustee

Not dispose of property with intent to defraud creditors

Not fraudulently give preference to one creditor over another

Not leave the country with any of their property

Not obtain credit without disclosing their status

Cannot be a company director/ member of parliament

Question 54

Self-assessment and trustees

Answer 54

Tax return must be completed in the same way as individuals

Same payment dates (2 on account and one final)

CGT paid by 31st January after end of tax year (no payments on account)

All trustees jointly and severally liable

Often dealt with by one trustee

Unpaid tax can be recovered from any of the trustees who may also be personably liable for any penalties incurred

Question 55

Taxation of a Bare Trust

Answer 55

Income belongs to beneficiary;

Based on beneficiary’s tax rate

Beneficiary liable for tax, personal allowance can be used

Beneficiary must include trust income on tax return

Parents gifting money to an unmarried minor child – treated as a settlor interested trust - £100 rule applies. Parent could reclaim any tax from the trust

Has CGT advantages as child can use their annual CGT allowance which will be at least double that of the trust

Question 56

Taxation of Trusts for vulnerable beneficiaries

Answer 56

Income and capital gains taxed on individual beneficiary rather than normal trust rules

Not all trusts for benefit of vulnerable person enjoy special tax treatment, only;

Disabled persons

‘Relevant’ minor children

Finance Act 2005, ‘Disabled person’;

Person who by reason of mental disorder (meaning within Mental health act 1983) incapable of administering their property or managing their affairs

Person in receipt of attendance allowance or disability living allowance care component at highest or middle rate/ DLA mobility component at higher rate or in receipt of personal independence payments

Trust property can only be applied for benefit of the disabled person

Any income must be paid to disabled person

‘Relevant minor’ is a child who has not yet attained age 18 and at least one of parents died.

Eligible trusts for relevant minors:

Statutory trusts (or Scottish equiv.)

Trusts established under will of deceased parent of relevant minor

Trust established under Criminal Injuries Compensation Scheme – giving absolute entitlement at age 18
Trustees are able to apply small amounts of income and capital (equivalent to the lower of £3000 or 3%) without having to prove it’s for the benefit of a vulnerable beneficiary
Both trustee and beneficiary must make a joint election using HMRC VPE1 which is irrevocable until one of the following events occurs:-

Person ceases to be a vulnerable person

Trust ceases to be a qualifying trust

Trust is terminated

Question 57

Taxation of 18-25 trust

Answer 57

Created by parent’s will or intestacy, or under Criminal Injuries Compensation Scheme

Absolute interest must be given to beneficiary by age 25

Beneficiary treated as owning the trust assets for IHT purposes up to age 18

Exit charge then levied based on number of quarters elapsed since age 18 when assets distributed (maximum of 28/40ths i.e. 7 years between 18 and 25)

Question 58

Income tax - Discretionary Trust

Answer 58

Trustees have £1,000 standard rate band

is split by number of trusts settlor has in existence in the tax year
(Min each can have is £200)

Thereafter, higher rate tax is due. 32.5% on dividends and 45% on savings and other income

Trustees’ expenses are allowable in calculating any income chargeable at higher rate

Expenses first set against dividend income, savings income and then other income

Tax relief on the expenses is received, increasing the trust basic rate band

Expenses only allowable if they are properly chargeable to income (premiums on life policies, adviser fees etc do not count) and any exempt income will have expenses proportionately reduced (e.g. trustees are non resident)

On distribution income becomes trust income and is liable to 45% tax

Trustees may have further tax liability at this stage

Question 59

Outline an individual’s responsibilities as an executor of a will

Answer 59

Establish the assets and debts of the estate/net value.

Apply to HM Revenue & Customs/complete PA1 Form/Inheritance Tax (IHT) 400/relevant form.

Pay the IHT bill.

Obtain Probate.

Gather the assets of deceased estate/any monies owed.

Pay off any outstanding mortgage/tax/debts.

Distribute the net proceeds to the named beneficiaries.

Act with due care/best interest of estate.

Question 60

State the conditions that must be satisfied for a deed of variation to be effective for IHT purposes

Answer 60

The deed must refer to the Will.

All beneficiaries must be 18 or over.

All beneficiaries must be of sound mind

Must be executed within two years of death

Must contain a statement to the effect that it is for IHT/as if deceased had made it.

It must be signed by all beneficiaries whose entitlement is varied.

There must be no consideration for money/monies worth.

Question 61

IHT treatment of Discretionary Trust

Answer 61

Transfer into the trust was a chargeable lifetime transfer.

The amount above the nil rate band/£325,000.

Less two annual exemptions of £3,000/£6,000.

Would have been subject to Inheritance Tax at 20% if paid by the trust or 25% if paid by Settlor.

If Settlor dies within seven years

There could be further tax to be paid by the trustees.

Based on the amount above the then nil rate band/nil rate band at date of death.

Taper relief might be available.

Credit would be given for tax paid at outset.

Periodic charges could be levied every ten years.

Exit charges could be levied on any capital distributions or appointments.

Question 62

Explain Quick Succession Relief

Answer 62

In place to avoid IHT being paid on the same asset ina short space of time. (quick succession)

Only available if in receipt of the gift within 5 years of death

Tax charged on death is reduced by a percentage of the IHT paid on the original gift.

The percentage applied depends on how long ago the gift was:

Less than 1 year - 100%
1 - 2 years           - 80%
2 - 3 years          - 60%
3 - 4 years          - 40%
4 - 5 years          - 20%

The relief is on the increase in the estate of the recipient of the gift.

Question 63

How does rent a room relief work?

Answer 63

An individual renting out a room in their only property has 2 options on how to be taxed.

They can elect to use rent a room relief or not.

Using rent a room relief, income tax is charged against any rental income which exceeds the allowance, currently £7,500.

Expenses can not be offset against the income when using rent a room relief.

Income is taxed at individuals rate of tax.

If they choose not to use rent a room relief, then the rental income minus any expenses will be charged at the individual’s rate of tax.

Question 64

How do contributions to a retirement annuity contract differ from other pensions?

Answer 64

Contributions are not subject to relief at source on contribution.

Relief has to be applied for via self assessment.

Relief is then given as a deduction from taxable income.

The deduction is the amount of the contribution made.