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Chpt 1 - CISI > Personal Tax > Flashcards

Personal Tax Flashcards

1
Q

What are the Salary Bands for Income Tax

A

Starting Rate - £0 - £5,000
Basic Rate - £0 - £37,000
Higher Rate - £37,000 - £150,000
Additional Rate - £150,000 +

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2
Q

What is the Personal savings allowance

A

£12,570

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3
Q

What is the dividend allowance and marriage allowance

A

£2,000 & £1,257

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4
Q

What are the dividend allowance rates

A

Below Basic Tax Limit - 8.5%
Over Basic tax limit & below £150,000 - 33.75%
Dividend Income above £150,000 - 39.35%

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5
Q

What is the Marriage allowance

A

Allows one person in a marriage to transfer up to 10% of personal savings allowance to their partner = £1,257

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6
Q

What is a Trust

A

A legal arrangement where one or more parties hold assets for the benefit of someone else

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7
Q

What is a discretionary trust?

A

where trustees generally have wide powers over the application trust income and trust capital

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8
Q

What is an accumulation & maintenance trust

A

where one or more of the beneficiaries must become entitled to either the trust income or capital by age <25

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9
Q

What is a Bare trust

A

Where the beneficiary has an immediate and absolute right to both capital and income

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10
Q

What is the standard rate and trust rate for rental income, savings & interest

A

Standard Rate = 20%
Trust Rate = 45%

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11
Q

What is the standard rate and Trust rate for dividend income

A

Standard Rate = 8.75%
Trust Rate = 39.35%

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12
Q

How is residential property income taxed?

A

Taxed as business income @ normal income tax rates
First £1,000 of rental income is tax free

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13
Q

How are OEICs taxed if paying interest

A

OEICs Paying Interest = if holds 60% or more of its assets in fixed interest securities is pats interest at applicable income rate

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14
Q

How are OEICs taxed if paying dividends

A

If comprised of less than 60% fixed interest securities it pays dividends at applicable dividend rate

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15
Q

What is capital gains tax

A

Arises from the disposal of chargeable assets by a chargeable person

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16
Q

What is the annual exemption for capital gains tax

A

£12,300

17
Q

What is the business asset deposit relief

A

Reduces the rate of CGT to 10% on all qualifying assets (max value of £1,000,000)

18
Q

Name the parties exempt from Capital Gains tax

A

Charities, OEICs, Investment Trusts (as long as compliant with rules)

19
Q

What is Inheritance Tax

A

The wealth that is left after the owner’s death but also to gifts up to 7 years before death

20
Q

What is a Potentially Exempt Transfer

A

A lifetime gift made whereby the owner survives for at least 7 years

21
Q

What is the Nil-Rate tax band

A

£325,000

22
Q

What is the Residence Nil-Rate tax band & value

A

It is a rate used when the main home is passed on death to direct descendants and £175,000

23
Q

What is the annual exemption for lifetime transfers

A

£3,000 per yr

24
Q

What is the small gift exemption for lifetime transfers

A

£250 per tax yr and can be used on as many done es as possible

25
Q

What is the gifts on marriage exemption for lifetime transfers

A

£5,000 from parent, £2,500 from Grandparent, £1,000 anyone else

26
Q

What is a Gift with reservation

A

Incomplete lifetime gift where donor continues to enjoy the gifted asset

27
Q

What is an Executor in estate administration

A

In cases where deceased left valid will, executors will obtain a grant of probate

28
Q

What is an administrator in estate administration

A

deceased left no valid will, administrators obtain letters of administration

29
Q

What does domiciled mean?

A

status of more permanent than residence

30
Q

What is domicile of origin

A

Acquired at birth and taken from father

31
Q

What is domicile of choice

A

established by moving to a country with intention of living permanently

32
Q

What is domicile of dependency

A

if parents adopt new domicile of choice then child (u16) will also adopt domicile

33
Q

what is deemed domicile

A

if resident in UK for 15/20 years

34
Q

What is the difference between Stamp duty and Stamp Duty Reserve Tax

A

stamp duty is the tax payable when there is some paper based transfer & SDRT is when the transfer is effected electronically

35
Q

What is First time buyers relief and Stamp duty rates

A

Means no stamp duty on homes costing £300,00 or below
Between £300,000 & £500,000 = 5%

36
Q

What are the rates of corporation tax

A

Main Rate - 19%
Special Rate - 20%

37
Q

Difference between tax evasion and Tax avoidance

A

Tax Evasion = seeking to avoid or reduce tax by failing to disclose
Tax Avoidance = legal minimisation of tax

Chpt 1 - CISI (7 decks)

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