Question & Answer Booklet Flashcards
Conditions of an EIS (8)
1) Based in UK
2) Carry out qualifying trade
3) Unlisted when shares issued and no arrangement to be listed
4) Fewer than 250 full time employees (500 for knowledge intensive)
5) Less than 7 years old (knowledge intensive less than 10 years old)
6) No age limit where investment is greater than 50% of average turnover
7) Gross assets not more than £15m before and £16m after investment)
8) Raise no more than £5mil under EIS/holding company of VCT in 12 months prior to investor getting shares
Conditions for a FHL (6)
1) In UK/EEA
2) Furnished
3) Let commercially
4) Available for let 210+ days in tax year
5) Let 105+ days in tax year
6) Periods of 31+ day lettings should not total more than 155 in tax year
Equation for bond gain
Proceeds + withdrawals - original cost - previous gains from chargeable event = gain
Conditions that need to be met for a debtor to set up an administration order
Debt less than £5,000
At least 2 creditors
Debtor must prove they can afford regular payments
A county/high court judgement against debtor to say they can’t pay in full
Restrictions on a bankrupt individual
Cannot be an insolvency practitioner
Unable to borrow more than £500 without disclosing bankruptcy
Cannot act as director of a company or create, manage or promote a company without court permission
Cannot manage business with different name without telling people they do business with that they are bankrupt
Conditions to make a deed of variation effective for IHT
Must be executed/signed within 2 years of death
Must reference the will
Need to be signed by any beneficiaries that are adversely affected
Show the variation is to take effect of IHT purposes
No consideration for money or money’s worth
Trustee duties in terms of investing trust assets
[BI-FIT CARD]
BI-FIT BI- Balance Interests of all beneficiaries F - Act fairly I - Impartially T - Trust deed terms followed CARD C - Invest carefully A - Professional advice R - Regularly review D - Diversify
Duties in respect of registering trust, keeping accounts and dealing with tax issues
1) Register trust with HMRC if it owes Income, Capital Gains or Inheritance tax
2) Register by 5th October tax year following when trust starts to pay any tax for first time
3) Trust will need Gov Gateway ID
4) Maintain records and accounts
5) File tax return by 31st Jan following end of tax year
6) Where income or capital distributed provide beneficiary with information on income and tax credit
When would someone be removed as an LPA?
If married and divorce (unless stated in documentation)
If lose mental capacity
If the applicant is made bankrupt their financial LPA is removed but they can be health & care LPA
Can be removed by the OPG is they believe attorney is abusing their power
If the applicant has capacity they can make a deed of revocation
Explain a WOL policy being put into trust in terms of IHT
The transfer is a CLT
The value is the market value (based on premiums paid/surrender value or actuarial value if he is in bad health)
Transfer value reduced by unused £3000 annual gift exemption for this tax year and £3000 for last tax year
IHT at the lifetime rate of 20% if value exceeds NRB (reduced by CLTs in the last 7 years)
Future premiums are also transfers unless in £3000 or out of normal expenditure. Chargeable is not exempt and exceed NRB
What is the BRB if someone has 1, 2, 3, 4 or 5 or more tursts?
1 = £1000 2 = £500 3 = £333 4 = £250 5or+ = £200
How is income treated within a discretionary trust?
Trust has a standard rate tax band (dependent on no. of trusts)
SRB used after trustee expenses
Expenses offset against dividends, savings then other income (gross up)
In the SRB savings charged at 20% and dividends at 7.5%
Outside SRB savings changed at 45% and dividends at 38.1%
How is income within an IIP taxed?
All at standard rate
check old vs new IIP
How does someone who has employed and self employed income get taxed to NI? How is it calculated?
Employee calculated weekly, director calculated annually.
Salary subject to Class 1. If pay full Class 1 then no Class 2 to pay.
Class 4 of profits over £8424
Who pays Class 1 NI and on what?
Employee - on their salary
Employer - on their salary, ER pension contributions and P11D
