Introduction to tax system Flashcards
what are direct taxes
those charged on income, gains and wealth. These are collected directly from the tax payer.
what are indirect taxes
those paid by the consumer to the supplier who then passes the tax to HMRC. Example is VAT
what is the period for the tax year
06/04/-05/04
what is the period for the financial year
01/04/-31/03
what is tax evasion
illegally misleading HMRC by suppressing or lying about information
what is tax avoidance
legal way of using legislation to reduce your tax burden
what is the automatic overseas test
an individual will not be a UK resident if:
they are present in the UK for fewer than 16 days in the tax year
they are present in the UK for fewer than 46 days and weren’t a resident during the 3 previous tax years
they work overseas full time and are not present for more than 90 days in the tax year
what is the automatic UK test
an individual will automatically be a UK resident:
they are present in the UK for 183 days or more
in a tax year
their only home is in the UK
they carry out full time work in the UK
what are the 5 UK ties
having close family in the UK
having accom available in the UK which is used at least one night in the tax year
doing at least 40 days a work in the uk in the tax year (at least 3 hours a day)
being present in the uk for at least 90 days during either of the 2 previous tax years
spending more time in the uk than any other country
(this is only resident if they have been a resident in any of the previous 3 tax years)
3 types of non savings income
trading
employment
property
5 types of savings income
bank interest building society interest interest from company loan stock interest from investment and savings accounts investments in government stocks
7 types of exempt income
winnings redundancy interest from national savings certificates interest on damages (personal injury) scholarships interest from ISA local authority grants
what is the annual limit for ISAs in a tax year
20000
what is the order in which PA is deducted against each type of income
first non savings, then savings, then dividends
when do you need to taper PA
when ANI exceeds 100,000
