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Property and IHT Tax > Property Tax > Flashcards

Property Tax Flashcards

1
Q

When must SDLT be sent after completion?

A

within 14 days of completion, even if no SDLT due

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2
Q

When must SDLT be paid?

A

within 14 days of completion

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3
Q

Is SDLT based on VAT inclusive amount of purchase price?

A

Yes

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4
Q

Nil rate band

A

£325,000

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5
Q

Residential nil rate band

A

£175,000

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6
Q

Residential nil rate band taper

A

£2 million
RNRB is reduced by half of value over £2m

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7
Q

How does owning second/additional properties affect tax?

A

Additional 3% on each tax band. Nil rate band is now 3% instead of 0%. Doesn’t apply if new home is replacing only dwelling so they will only have 1.

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8
Q

SDLT on lease?

A

Charged on grant of a new lease. Based on lease premium and net present value of the rent payable over the term.

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9
Q

SDLT for first time buyers

A

Up to £300,000 0%
£300-£500,000 5%
Property must not be more than £500,000 for this relief

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10
Q

Definition of 1st time buyer

A

Never owned any interest in residential property in UK or anywhere in the world

Main residence

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11
Q

Standard SDLT

A

Applies to properties over £250,000

Up to £250,000 0%

The next £675,000 (£250,001 to £925,000) 5%

The next £575,000 10% (£925,001 to £1.5m)

The remaining amount 12% (above £1.5m)

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12
Q

What tax do you pay if more than one purchase in linked transaction, residential property?

A

Can decide to pay tax on mean average (consideration of all houses/number of houses) rather than the actual consideration for each house.

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13
Q

SDLT if 6 or more properties in single transaction?

A

Can choose to apply non residential SDLT, lower than residential

Up to £150,000 0%

The next £100k (£150,001 to £250,000) 2%

Remaining amount 5% (above £250,000.

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14
Q

Are contents part of purchase price?

A

Not likely to be valued separately unless very valuable, designer furniture.

Doesn’t form part of purchase price or SDLT

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15
Q

Is their first time buyers relief in Wales?

A

No

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16
Q

LTT thresholds

A

£225,000 for residential or non residential unless you own another property

Up to 225k 0%
£225,001 to £400,000 6%
£400,001 to £750,000 7.5%
£750,001 to £1.5m 10%
Over £1.5m 12%

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17
Q

Purchase price of £800k, non residential property. Calculate SDLT.

A

800k - 150,000 (non residential NRB) = 650,000
0.02% of 100k=2k
0.05% of 550k = 27,500

SDLT= 0 + 2 + 27,500 = 29,500

18
Q

Purchase price of £1m,residential property. Calculate SDLT.

Thresholds (just for the eg)
Up to 125k 0%
125k to 250k 2%
250k to 925,000 5%
925,000 to 1.5m 10%
Over 1.5m 12%

Firs time buyers relief doesn’t apply to non residential proprty

A

£43,750
£125,000 =0
125,000 at 2%=2500
675,000 at 5%=33,750
75,000 at 10%=7500

19
Q

Wales first time buyer, residential property, £190,000.

Thresholds (for example):
Up to £180k 0%
£180k to £250k 3.5%

A

£350
Wales doesn’t have first time buyers relief

20
Q

What is VAT charged on?

A

Good and services by taxable person during course of business

21
Q

When is VAT paid?

A

Every 3 months to HMRC

22
Q

How much is VAT?

A

20% for most things (some are exempted or 0%)

23
Q

Output and input tax?

A

Output on what you supply. Input, what you purchase for the business. Can minus input from output and send the difference to HMRC.

24
Q

When should you register for VAT?

A

Earning over 85k in 12 month period or expected to exceed this in following 30 days.

25
Q

Why would you register for VAT if earning less than 85K?

A

Offset input tax

26
Q

What are exempt supplies?

A

Not taxable for VAT, can’t offset input tax. e.g. residential property (except new builds) and commercial property over 3 years old if owner has opted not to tax.

27
Q

Zero rated supplies?

A

Residential newbuilds, buyer doesn’t pay VAT, seller can still recover input tax.

28
Q

When will standard 20% of VAT usually be charged?

A

Newly constructed commercial property (less than 3 years), older commercial property (more than 3 years) if company opted to tax. Tenants would also have to pay VAT in their rent.

29
Q

When can voluntarily opting into VAT if earning less than 85k be revoked?

A

Commercial property, if not used for 6 months. Construction work is usually taxed at 20% unless lower rate applies.

30
Q

When can you deregister from VAT?

A

Less than 83,000 for 12 months and when ceased trading (a must)

31
Q

When can you revoke option to tax?

A

Within 6 months of decision if no VAT charged.

20 years after option to tax has been in place.

32
Q

What should be included on tax invoice?

A

VAT number, tax point, value of supply, rate of tax charged.

33
Q

Calculate VAT on £120 (inclusive of VAT)

A

120=6= £20 VAT

34
Q

What is a capital gain?

A

Profit when disposing (sale/gift) of asset.

Difference between sale price/current value and cost of acquiring it (cost of capital improvements)

35
Q

What is CGT charged on?

A

All gains in tax year 6 April to 5 April, due on or before 31Jan following tax year.

Penalties for late payment.

36
Q

When is CGT not payable?

A

Gifts to spouse/civil partner

37
Q

What kind of property is CGT charged on?

A

Property that is not main home. Property that has been used for business, let out or very large.

38
Q

Dwelling house exemption/Private residence relief

A

Wont pay CGT if:
you have one home and have lived in it as main home whole time

not let part of it (not incl lodger)

not used part of it exclusively for business (occasional home office doesn’t count)

the grounds and all builidngs are less than 5k sqm

you did not buy home to make a gain

39
Q

Calculating actual occupation/allowed period of absence?

A
  • 1st 12 months of ownership (facilitate sale of another property/refurb)
  • Any period of 3 years not living there
  • Any period where owner wasn’t working in UK
  • Up to 4 years living elsewhere in UK for work
  • last 9 months of ownership

May only be entitled to partial relief if absences outside of these conditions

40
Q

CGT rates and income thresholds

A

If taxable income + CG is less than 50,000 (Basic rate band) CGT is 18%

Pay 28% on any amount above basic tax rate band (50,000)

For residential property, otherwise 10 and 20%.

41
Q

Calculating CGT. CG of 228,000, allowances already deducted. Taxpayer’s income is 45,000. No private residence relief applicable (e.g. buy to let)

A

228k +45k =273k (higher rate tax band)

CG under 50k taxed at 18% (5k to be taxed at 18%, cuz taxable income was already 45k) £900

228k-5k=223,000

223,000 taxed at 28%, £62,440.

CGT is 900+62440 =63,340

41
Q

Do you pay CGT if property sold at a loss?

A

No

Property and IHT Tax (2 decks)

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