Income Tax Flashcards
What are the professional rules and practice guidance
- Integrity
- Objectivity
- Professional competence and due care
- Confidentiality
- Professional Behaviour
What ae the threats to compliance?
1.Self-interest threats
2. Self-review threats
3. Advocacy Threats
4. Familiarity Theats
5. Intimidation Threats
What is the financial year?
6th April - 5th April
Pesons will automatically be treated as not resident in the UK when….
They are in the UK for less than 16 days in the tax year
A person in the UK for less than 46 days and not previously a resident
A person who works full time oversees and has not been in the UK for more than 90 days in the tax year
You are automatically a resident if…
The persons only home is in the UK
The perosn carries out full time work in the UK
What are the UK ties?
- Spouse/Civil partner or minor child in the UK
- House in the UK which is used during the tax year
- In UK for more than 90 days in either of 2 previous tax years
- More time in the UK than in an other country in the tax year
- Doing substantive work in UK
What are the key dates for self- assessment tax returns
31st Oct follwoing the end of a tax year (paper return)
31st January at the end of the tax year (filling online)
What is the penalty system for self-assessment?
automatic fixed pentalty of £100
£10/day for next 3 mnths
6 months late = 5% of tax due or £300 (bigger amount)
What is the payment system for self-assessed income tax payments?
1st payment = 31st Jan in tax year
2nd payment = 31st July after tax year
Balancing payment = 31st Jan after tax year (50% from tax teae + mis
takes + under/over payment
Who can claim Maried Couple Allowance (MCA)
MCA tax reducer is calculated at a fixed rate of 10% of the relevent MCA amount
Married after 5th December 2005
MCA is cliamed by tghe spouse who has a higher net income
MCA is claimed if spouse is born before 6 April 1935
Given in Tax sheet:
After £34,600 MCA is dedcuted by £1 for eery £2 but minum allowance is £4010
What is Marriage Allowance
Giving 10% of personal allowance to spouse
Transferor -Spouse must have no tax liability or be basic band AFTER marriage allowance reduction
Recipient - must be a basic rate taxpayer
Cannot claim for MCA and MA
How do you calcuate gift-aid
The basic rate band is extebed by 125% of the gift-aid
For a higher rate oater - tax relief at higher rate
for an additional rate tax payer - tax relief at additional rate
Child Benefit Income Tax Charge
idk man
What are the types of pension schemes? And who is each scheme for?
- Occupational Scheme - Employees
- Personal Pension Scheme - Person directly to pension providor and seld-employed people
How do Occupational Schemes work?
- contributions bmade by employer
- maybe contributions made by employee
- no limits on amount by employer
- contribution will count towards employee’s annual allowamce
- and value of the fund of the lifetime allowance
- contributions are tax deductible
contributions exempt from NIC payments
What are the rueles of personal pension scheme
will be tax exempt unless:
- it is higher than their relevent earnings
- and is a £3,600 gross contribution
Rules for when employee makes contribution into an occupational scheme
Employer will deductthe gross contribtion from individuald employment income before computing tax under PAYE
How is Tax relief given to personal pension schemes
Basic Rate Relief - Given at source so HMRC adds 20% of pension into pension scheme too
Higher and additional - Extend the basic and higher rate band by gross amount added
Therefore add £1000, basic and additional bands increase by £1000
What is Anual Allowance (AA) and how does it work?
AA given in tax sheet
It is total pension input allowed for tax relief each year
If AA is not fully used, it can be carried forward for 3 years
If AA exceeds limit, it is chargeable to income tax (£1 for every £2, rules on tax sheet)
What is annual Allowance Charge
Annual Allowamce Charge is treated as an additoonal non-savings incomeW
What is lifetime allowance?
Value of £1,073,100 (in tax sheet) that applies to value of pesnion fund built up at the date taxpayer takes their pension
Abolished for 2024/25 tax year onwards
What are the rules in the fully furnished residential property?
- Normal capital allowances not given
- Replacement furniture relief for like for like furnishings
- Relief is available for revenue expenidture incurred before lettings commenced
What are the rules for furnished holiday lettings availability
- Has to be available 210 days in the year
- Has to be let 105 days
- The same tenant cannot stay for longer than 31 days
What are the tax provisions for furnished holidays
- Treat as trading income
- Can deduct normal capital allowance calculated in the normal way
- Loss relief can be claimed as normal
- Capital Gains Tax reliefs is also available
