Income Tax Flashcards
Personal representative
individual whom another has trusted to manage their property and money. When a person dies, executor or administrator will settle IHT affairs of the deceased
Chargeable/exempt
employment income
Chargeable
Chargeable/exempt
Trading income
Chargeable
if less than £1000 may be exempt
Chargeable/exempt
Property income
Chargeable
If less than £1000 may be exempt
Chargeable/exempt
savings income from loan interest/bank /building society
Chargeable
Chargeable/exempt
Dividend income
Chargeable
Chargeable/exempt
Miscellaneous income
Chargeable
Chargeable/exempt
Interest on national savings certificate
Exempt
Chargeable/exempt
ISA income
Exempt
Chargeable/exempt
Betting, lottery and premium bond income
Exempt
Chargeable/exempt
Social security benefits e.g. housing and child benefit
Exempt (rules)
Chargeable/exempt
first £7,500 of letting under rent a room
Exempt
Chargeable/exempt
Scholarships
Exempt
Chargeable/exempt
Income tax repayment interest
Exempt
Chargeable/exempt
Universal credit
exempt
Chargeable/exempt
apprenticeship bursaries paid to care leavers
exempt
Chargeable/exempt
payments made under compensation schemes (windrush)
Exempt
Income tax relief on qualifying interest payments and trading losses in some cases is
Higher of £50,000
25% of adjusted total income
Adjusted total income
Total income + payroll giving - gross personal pension contributions
Adjusted net income
net income - deduct grossed up amounts of gifts aid and personal pension contributions
Tax year runs from
6 aPRIL - 5 aPRIL
Child benefit for eldest/only child
£1134
Child benefit for second and each other child
£751
Child benefit income tax charge if tax payer/partner has adjusted net income of over £50,000
1% for each £100 between £50k and £60k.
Full amount if income over £60,000
If both partners earn more than £50k, who is liable for the tax charge in relation to the child benefit
One with higher income
What are devolved taxes
Devolution gives Scotland, Wales and NI forms of self government including ability to set certain tax rates separately
Election to carry back gift aid 1 year must be made
later of
date return for previous year filed
31 January following the end of previous tax year
Payroll giving scheme
Donations made to charity under approved payroll giving scheme giving tax relief on the amount paid to charity
Amount of deduction for gift of assets to charity
MV of shares/securities at date of disposal _ incidental costs of disposal (broker fees) - consideration given in return for disposing - value of any other benefits received by the donor, or connected person
Qualifying shares or securities
Shares / securities listed on / dealt with on (inc AIM) recognised stock exchange
Qualifying
Qualifying shares or securities
Units in authorised unit trust
Qualifying
Qualifying shares or securities
Shares in open-ended investment company
Qualifying
Qualifying shares or securities
Holdings in certain foreign collective investment schemes
Qualfiying
Deduction for land/buildings given to chairty
= MV freehold/leasehold land or buildings given to a charity
Qualifying interest payments
To buy plant or machinery for use in a partnership
Interest Qualifies for three years from end of tax year in which loan was taken out
if part private - only proportion eligible
Qualifying interest payments
to buy plant or machinery to use in employment purposes
Interest Qualifies for three years after the end of the tax year the loan was taken out.
If part use private - proportion eligible
Qualifying interest payments
to buy interest in close company (other than close holding company) /lending money to company for purpose of business
Qualifying if
borrower holds shares AND works full time as manager or director
OR have material interest in the close company (5%+ shares)
Close Company defintion
UK Resident company controlled by shareholder-directors
OR
controlled by 5 or fewer shareholders
Qualifying interest payments
buying shares in employee0controlled company
If company Is unquoted trading company resident in UK with at least 50% voting shares held by employees
Qualifying interest payments
to invest in partnership / contribute capital/make loan
Qualifying gif borrower is partner (not limited liability partner)
relief ceases when stop being parter
Qualifying interest payment
To buy shares in / lend money for co operative
Qualifying if borrower works for greater part of time in co op or sub
Qualifying interest payment
To pay IHT
Paid by personal representative qualifies for 12 months
Qualifying interest payment
to replace loans to buy interest in close company/employee controlled/invest in partnership/buyshares or Land in co op or pay IHT
Qualifying
Where interest is allowable the deduction is …
the amount payable on accruals basis, not the interest paid
Income on jointly owned property is split
50/50 unless declaration made to HMRC - notice must be sent to HMRC within 60 days of the declaration and this can’t be made in respect of doing bank/building society account
Dividends from shares in a family company jointly owned by spouses/civil partners will be taxed
According to actual ownership
Marriage allowance
1260
If both are basic rate tax payer or transferor has no tax liability
Recipient benefits from reduction in income tax liability at basic rate
