PT 50 - Taxation of Foreign Income - General Principles

Question 1

All individuals pay income tax on their UK income regardless of their residence status.

What’s the exception?

Answer 1

FOTRA securities.

Question 2

Who gets a personal allowance?

Answer 2

All UK residents and also to individuals who, at any point in the tax year, are UK or EEA nationals or residents of the Channel Islands and the Isle of Man

Question 3

ITA 2007, s.811 places a limit on the tax liability for an individual who is not resident in the UK.
However …..

Answer 3

if a claim for personal allowances is made, the tax liability is calculated as
normal.

Question 4

UK resident individuals pay income tax on their foreign income. Foreign income is
generally taxed on an….

Answer 4

arising basis

This means that income is taxed in the year in which it arises or is received. It makes
no difference whether such income is brought back to the UK or kept offshore.

Question 5

If a UK resident individual is not domiciled in the UK, a claim can be made for foreign
income….

Answer 5

to be taxed on a remittance basis

Question 6

If an individual is non-UK resident, they will not be…

Answer 6

taxed on their foreign income

Question 7

Anti avoidance rules apply to…

Answer 7

an individual who is UK resident in at least four of the seven tax years
prior to departure and is non-resident for five years or less.

In this case the non UK resident period is taxed when the person resumes residence in the UK

Question 8

The anti-avoidance rules on residence apply to which types of income?

Answer 8

Most commonly dividends from an overseas close company and capital gains tax

Question 9

There was some kind of amnesty where taxpayers had a chance to correct errors in…

Answer 9

2017/ 18

anyone who has outstanding tax for years up to 2015/16 will face very harsh penalties.

Question 10

Where UK tax liability is restricted the maximum is the sum of what two figures:

Answer 10

A: any amount of tax deducted from disregarded income for the tax year plus any tax treated as deducted or shown as tax credit.

B: any amount of tax that would be the liability to income tax ignoring the disregarded income but removing any entitlement to allowances such as the personal allowance