Module 2 National Insurance Flashcards
How do voluntary class three national insurance contributions work and how they can help people qualify for a full new state pension
– class 3 is a flat rate weekly amount back to be paid by UK residents who had paid insufficient class one or two contributions to our tax year and wish to ensure they are accrue entitlement to state benefits including the new state pension
– they cannot be paid in the same tax year in which to reach state pension age
– or after state pension age
– you can pay a contribution is going back six years
– this will be at the current rates rather than the right that applied in the missing is
This can mean you can qualify for a full new state pension
Cat what is the situation with multiple employment’s which are associated
Earnings from linked employers will be aggregated for NI purposes
Multiple employments not connected – how is this dealt with
The maximum class 1NI contributions payable by an individual with more than one employment equals £50,000 -£8632 equals £41,368×12% equals £4964.16 There is no maximum at the 2% rate which is payable on the combined earnings over £41,368 after taking off the PCT for each
It is possible to apply for deferment in respect of one set of earnings
– first set of earnings will be calculated on the normal basis
Second set of earnings would have exempted amount taken off but the balance just charged at 2%
– National Insurance will be charged on an ongoing basis on the above sets of earnings
– at the end of the tax year the earliest would be reviewed and the individual would need to pay the difference betweenThe annual maximum of £4964.16 +2% of the combined earnings over £41,368 after taking off the PCT for each and the amount actually paid
How and when are employed national insurance contributions paid
Class one contributions are collected through PAYE with income tax
The employer calculate the amounts due to that see employer contribution from earnings as the employer contribution and paste email over to HMRC
Class 1a NI payments are due on the 22nd of July after the end of the tax year to which they relate
How and when are self-employed national insurance contributions paid
Class 2 paid under self-assessment due in full on the 31st of January following the end of the current tax year
Class 4 paid with income tax into payments on account 31st of January during the tax year and 31st of July following the end of tax year – with a balancing payment/repayment on the following 31st of January
How do voluntary class three national insurance contributions work and how they can help an individual qualify for a new full state pension
– Class three is a flat rate weekly amount that can be paid by UK residents who have paid insufficient class one or two contributions during the tax year and wish to ensure they accrue entitlement to state benefits including the new state pension
They cannot be paid in the same tax year in which to reach state pension age
Or after state pension age
You can pay contributions going back six tax years
They’ll be at the current rate (£15 in 19/20) rather than the rate that applied in the missing years
Explain CGT on chattels
Free of CGT if the disposal proceeds are less than £6000
If disposal proceeds exceed £6000 but are less than £15,000 then the balance over £6000 is multiplied by 5/3 to give maximum chargeable gain
If actual gain is lower than this figure is used
Conditions and benefits for CGT deferral as regards an EIS scheme
The investor must be a UK resident
Reinvestment must be made 12 months before or three years after the disposal
There is no upper limit on the amount of gain that can be deferred
The game is then deferred until the EIS shares are disposed of
Unless the proceeds are invested in another EIS or the company ceases to qualify within three years
Helena would also be able to make a deduction from her income tax liability of up to 30% of the amount invested
Conditions and tax benefits as regards reinvestment in an SEIS
The investor must be UK resident
Reinvestment must take place in the same tax year as the game arose
50% of the game reinvested in S EIS shares that qualify for income tax relief are exempt from CGT
Up to £50,000 limit
The other 50% liable to CGT
Tax reducing discount from income tax liability of up to 50% of the amount reinvested in the SCIS
Principal private residence relief – this establishes the total number of chargeable months in order to proportion again
What periods can be ignored (seven)
Up to a year between buying the property and actually living in it (may be extended to 2 years in exceptional circumstances
Any period before first of April 1982
Any period up to 3 years provided it was preceded by and followed by periods of residence and no other property qualified as PPR (PP are sandwich)
The last 18 months (nine months from 2020/21) of ownership provided the property had qualified as PPR at some point (unless the sale is in respect of someone going into care or contracts are exchanged before six or eight or 2014 with completion before sixth of April 15 when the last 36 months of ownership can be ignored
5. Periods of up to 4 years in total if absence was due to employment elsewhere in the UK – PPR sandwich rules
6. Any period whilst working abroad – PP are sandwich rolls
7. Any period living in job-related accommodation with an intention to return to the PPR
Explain what letting relief is
This is all part of the home has been let out and can be available instead of PPR
The maximum allowance of letting relief due is the lower of
– £40,000
The amount of PPR relief due
– the gains made on the left part of the property
N.b. from April 20 this only applies if the owner Shares house with the tenant
explain share identification rules
Where I shareholder has acquired a portfolio of shares the same company over a period of time there is a specific order in which they are deemed to be disposed of when Sam are sold
– acquisitions on the same day
Acquisitions within the following 30 days
– acquisitions in the shared pool – this aggregates all acquisitions except those made on the same day or the following 30 days
When our class 1A contributions due
Class 1A payments are due on the 22nd of July after the end of the tax year to which they relate
