Seminar 1 UK Tax System and Income Tax Flashcards
(31 cards)
Direct Taxes
charged on income, profits or gains
What are the four main direct taxes
- income tax
- capital gains tax
- inheritance tax
- corporation tax
Indirect taxes
taxes on spending
Who are indirect taxes paid to
they are paid to the vendor as part of the purchase price
What are the two main indirect taxes
- value added tax
- customs duties and excise duties
When does the tax year run for individuals
6 April - 5 April
When does the tax year run for companies
1 April - 31 March
What is HMRC
a body of civil servants headed by commissioners for revenue and customs
What is self assessment
a system used to assess and individuals liability to income tax
When must tax returns submitted on paper be filed
31 October
When must tax returns submitted electronically be filed
31 January
When must a notification of charge-ability be made
must be within 6 months of the end of the tax year
Is tax evasion legal or illegal
illegal
Is tax avoidance legal or illegal
legal
What is the General anti abuse rule
provides statutory mechanism to counteract tax avoidance methods
What four qualities make a taxable person
- resident in the UK for a tax year
- receive UK income
- adults, children, trustees
- companies paying corporation tax
What are the 5 cateogories of income
- employment income
- property income
- trading income
- interest
- dividends
Seven types of exempt income
- ISA
- national savings certificates
- certain minor benefits provided to employees
- certain lump sums from pension schemes
- rent a room income
- premium bonds
- some social security benefits
What is the basic rate band of tax
20%, first 37700
What is the higher rate band of tax
40%, next 150,000
What is the additional rate band of tax
45%
What three things does non savings income consist of
- employment income
- business profits
- property income
What three things does savings income include
- bank and building society interest
- interest on gvmt securities
- loan interest
When is savings income taxed at starting rate of 0%
if it falls within the first £5000
