Income Tax

Question 1

Explain what is meant by a qualifying non resident?

Answer 1

Resident in the European Union, European Economic Area, UK Commonwealth and countries where UK tax allowances are used as part of a double tax treaty.

Question 2

What are non qualifying residents entitled to use?

Answer 2

The UK personal income tax allowance

Question 3

Who does not benefit from the UK personal income tax allowance?

Answer 3

Non UK Domiciled people earning more than £2,000 per annum.

Question 4

How are non UK Domicile people taxed?

Answer 4

On the remittance basis

Question 5

How much personal allowance can be transferred between Spouse/CP’s? When can this not be exercised?

Answer 5

£1,100 and When the recipient is a higher rate taxpayer

Question 6

It might be better for a couple to apply for Marriage allowance if either person was born before what date?

Answer 6

6 April 1935

Question 7

What happens to the personal allowance when someone is earning over £100,000

Answer 7

It is reduced by £1 for every £2 over £100,000

Question 8

When does somebody cease having the personal allowance available to them?

Answer 8

When they earn over £122,000

Question 9

What is the effective rate of tax for somebody with net adjusted income over £122,000 between £100,000 and £122,000? Explain

Answer 9

60% - 40% HRT plus the loss of £11,000 at 20%

Question 10

Which local countries does UK tax not cover?

Answer 10

Isle of Man and channel islands

Question 11

Give 3 examples of people that need to complete a self assessment tax return?

Answer 11

1. Higher rate income taxpayers
2. untaxed income such as rental income
3. Self Employed and business partners
4. Company Directors
5. Capital gains

Question 12

What 2 classes of NI does a self assessment help calculate for the self employed?

Answer 12

Classes 2 & 4

Question 13

What are submission dates each year for self assessment tax forms?

Answer 13

31 October paper form

31 January online following tax year

Question 14

What are the payment dates for income tax and class 2 and class 4 NI?

Answer 14

• 1st payment 31 January, following the previous tax year for half the income and NI then:
• 31 July following the previous tax year pay the other half of the income tax & NI owed from the previous year
• then balancing payment on following 31 January the following year for the difference of payments made and income tax due

Question 15

What other type of tax does the balancing payment include?

Answer 15

Capital Gains tax

Question 16

What are 3 types of penalty HMRC dish out for missing deadlines?

Answer 16

1. Interest on late payments or underpayments of tax due, starting when tax was due
2. 5% surcharges on 31 January following tax year on unpaid tax due. 30 days later on 3 March, 3rd Aug and 3 Feb
3. Fixed penalty of £100 on late tax return, £10 daily penalty per day for 90 days

Question 17

What 4 types of accounts/holdings pay Gross interest?

Answer 17

1. Bank/Building society
2. NS&I
3. Gilts
4. PIBS

Question 18

What 4 types of holding pay interest net (basic rate paid at source)?

Answer 18

1. Corporate Bonds
2. Fixed interest Unit Trusts
3. OEICS
4. Purchased life annuities

Question 19

Identify 3 penalties relating to late submission of tax returns?

Answer 19

1. £100 penalty if not submitted by 31 January following end of tax year
2. £10 per day penalty if more than 3 months past deadline, chargeable per day for up to 90 days
3. £300 or 5% of tax outstanding, whichever is higher if still not returned after 6 months later and 12 months

Question 20

What option is open to a Self Employed person regarding NI contributions if they earn under the small profits threshold?

Answer 20

They could opt not to pay class 2 NIC's as their income is below the threshold
They could opt to pay class 2 even though income is low
They could make class 3 contributions although these are more expensive and provide no additional benefit

Question 21

Name 3 ways in which you can register for being self employed?

Answer 21

1. Register with HMRC for self assessment
2. Within 3 months of beginning a trade
3. Register for class 2 NIC’s

Question 22

How are class 2 and class 4 NIC’s collected?

Answer 22

Class 2 collected 4 weekly/monthly by Direct Debit

Class 4 collected by self assessment