Personal Tax Flashcards
What are the Salary Bands for Income Tax
Starting Rate - £0 - £5,000
Basic Rate - £0 - £37,000
Higher Rate - £37,000 - £150,000
Additional Rate - £150,000 +
What is the Personal savings allowance
£12,570
What is the dividend allowance and marriage allowance
£2,000 & £1,257
What are the dividend allowance rates
Below Basic Tax Limit - 8.5%
Over Basic tax limit & below £150,000 - 33.75%
Dividend Income above £150,000 - 39.35%
What is the Marriage allowance
Allows one person in a marriage to transfer up to 10% of personal savings allowance to their partner = £1,257
What is a Trust
A legal arrangement where one or more parties hold assets for the benefit of someone else
What is a discretionary trust?
where trustees generally have wide powers over the application trust income and trust capital
What is an accumulation & maintenance trust
where one or more of the beneficiaries must become entitled to either the trust income or capital by age <25
What is a Bare trust
Where the beneficiary has an immediate and absolute right to both capital and income
What is the standard rate and trust rate for rental income, savings & interest
Standard Rate = 20%
Trust Rate = 45%
What is the standard rate and Trust rate for dividend income
Standard Rate = 8.75%
Trust Rate = 39.35%
How is residential property income taxed?
Taxed as business income @ normal income tax rates
First £1,000 of rental income is tax free
How are OEICs taxed if paying interest
OEICs Paying Interest = if holds 60% or more of its assets in fixed interest securities is pats interest at applicable income rate
How are OEICs taxed if paying dividends
If comprised of less than 60% fixed interest securities it pays dividends at applicable dividend rate
What is capital gains tax
Arises from the disposal of chargeable assets by a chargeable person
What is the annual exemption for capital gains tax
£12,300
What is the business asset deposit relief
Reduces the rate of CGT to 10% on all qualifying assets (max value of £1,000,000)
Name the parties exempt from Capital Gains tax
Charities, OEICs, Investment Trusts (as long as compliant with rules)
What is Inheritance Tax
The wealth that is left after the owner’s death but also to gifts up to 7 years before death
What is a Potentially Exempt Transfer
A lifetime gift made whereby the owner survives for at least 7 years
What is the Nil-Rate tax band
£325,000
What is the Residence Nil-Rate tax band & value
It is a rate used when the main home is passed on death to direct descendants and £175,000
What is the annual exemption for lifetime transfers
£3,000 per yr
What is the small gift exemption for lifetime transfers
£250 per tax yr and can be used on as many done es as possible
What is the gifts on marriage exemption for lifetime transfers
£5,000 from parent, £2,500 from Grandparent, £1,000 anyone else
What is a Gift with reservation
Incomplete lifetime gift where donor continues to enjoy the gifted asset
What is an Executor in estate administration
In cases where deceased left valid will, executors will obtain a grant of probate
What is an administrator in estate administration
deceased left no valid will, administrators obtain letters of administration
What does domiciled mean?
status of more permanent than residence
What is domicile of origin
Acquired at birth and taken from father
What is domicile of choice
established by moving to a country with intention of living permanently
What is domicile of dependency
if parents adopt new domicile of choice then child (u16) will also adopt domicile
what is deemed domicile
if resident in UK for 15/20 years
What is the difference between Stamp duty and Stamp Duty Reserve Tax
stamp duty is the tax payable when there is some paper based transfer & SDRT is when the transfer is effected electronically
What is First time buyers relief and Stamp duty rates
Means no stamp duty on homes costing £300,00 or below
Between £300,000 & £500,000 = 5%
What are the rates of corporation tax
Main Rate - 19%
Special Rate - 20%
Difference between tax evasion and Tax avoidance
Tax Evasion = seeking to avoid or reduce tax by failing to disclose
Tax Avoidance = legal minimisation of tax
