Income Tax Flashcards
Explain what is meant by a qualifying non resident?
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.
What are non qualifying residents entitled to use?
The UK personal income tax allowance
Who does not benefit from the UK personal income tax allowance?
Non UK Domiciled people earning more than £2,000 per annum.
How are non UK Domicile people taxed?
On the remittance basis
How much personal allowance can be transferred between Spouse/CP’s? When can this not be exercised?
£1,100 and When the recipient is a higher rate taxpayer
It might be better for a couple to apply for Marriage allowance if either person was born before what date?
6 April 1935
What happens to the personal allowance when someone is earning over £100,000
It is reduced by £1 for every £2 over £100,000
When does somebody cease having the personal allowance available to them?
When they earn over £122,000
What is the effective rate of tax for somebody with net adjusted income over £122,000 between £100,000 and £122,000? Explain
60% - 40% HRT plus the loss of £11,000 at 20%
Which local countries does UK tax not cover?
Isle of Man and channel islands
Give 3 examples of people that need to complete a self assessment tax return?
- Higher rate income taxpayers
- untaxed income such as rental income
- Self Employed and business partners
- Company Directors
- Capital gains
What 2 classes of NI does a self assessment help calculate for the self employed?
Classes 2 & 4
What are submission dates each year for self assessment tax forms?
31 October paper form
31 January online following tax year
What are the payment dates for income tax and class 2 and class 4 NI?
- 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
What other type of tax does the balancing payment include?
Capital Gains tax
What are 3 types of penalty HMRC dish out for missing deadlines?
- Interest on late payments or underpayments of tax due, starting when tax was due
- 5% surcharges on 31 January following tax year on unpaid tax due. 30 days later on 3 March, 3rd Aug and 3 Feb
- Fixed penalty of £100 on late tax return, £10 daily penalty per day for 90 days
What 4 types of accounts/holdings pay Gross interest?
- Bank/Building society
- NS&I
- Gilts
- PIBS
What 4 types of holding pay interest net (basic rate paid at source)?
- Corporate Bonds
- Fixed interest Unit Trusts
- OEICS
- Purchased life annuities
Identify 3 penalties relating to late submission of tax returns?
- £100 penalty if not submitted by 31 January following end of tax year
- £10 per day penalty if more than 3 months past deadline, chargeable per day for up to 90 days
- £300 or 5% of tax outstanding, whichever is higher if still not returned after 6 months later and 12 months
What option is open to a Self Employed person regarding NI contributions if they earn under the small profits threshold?
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
Name 3 ways in which you can register for being self employed?
- Register with HMRC for self assessment
- Within 3 months of beginning a trade
- Register for class 2 NIC’s
How are class 2 and class 4 NIC’s collected?
Class 2 collected 4 weekly/monthly by Direct Debit
Class 4 collected by self assessment
