Seminar 1 UK Tax System and Income Tax

Question 1

Direct Taxes

Answer 1

charged on income, profits or gains

Question 2

What are the four main direct taxes

Answer 2

• income tax
• capital gains tax
• inheritance tax
• corporation tax

Question 3

Indirect taxes

Answer 3

taxes on spending

Question 4

Who are indirect taxes paid to

Answer 4

they are paid to the vendor as part of the purchase price

Question 5

What are the two main indirect taxes

Answer 5

1. value added tax
2. customs duties and excise duties

Question 6

When does the tax year run for individuals

Answer 6

6 April - 5 April

Question 7

When does the tax year run for companies

Answer 7

1 April - 31 March

Question 8

What is HMRC

Answer 8

a body of civil servants headed by commissioners for revenue and customs

Question 9

What is self assessment

Answer 9

a system used to assess and individuals liability to income tax

Question 10

When must tax returns submitted on paper be filed

Answer 10

31 October

Question 11

When must tax returns submitted electronically be filed

Answer 11

31 January

Question 12

When must a notification of charge-ability be made

Answer 12

must be within 6 months of the end of the tax year

Question 13

Is tax evasion legal or illegal

Answer 13

illegal

Question 14

Is tax avoidance legal or illegal

Answer 14

legal

Question 15

What is the General anti abuse rule

Answer 15

provides statutory mechanism to counteract tax avoidance methods

Question 16

What four qualities make a taxable person

Answer 16

• resident in the UK for a tax year
• receive UK income
• adults, children, trustees
• companies paying corporation tax

Question 17

What are the 5 cateogories of income

Answer 17

• employment income
• property income
• trading income
• interest
• dividends

Question 18

Seven types of exempt income

Answer 18

• 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

Question 19

What is the basic rate band of tax

Answer 19

20%, first 37700

Question 20

What is the higher rate band of tax

Answer 20

40%, next 150,000

Question 21

What is the additional rate band of tax

Answer 21

45%

Question 22

What three things does non savings income consist of

Answer 22

1. employment income
2. business profits
3. property income

Question 23

What three things does savings income include

Answer 23

1. bank and building society interest
2. interest on gvmt securities
3. loan interest

Question 24

When is savings income taxed at starting rate of 0%

Answer 24

if it falls within the first £5000

Question 25

What is the personal allowance

Answer 25

£1000

Question 26

What is the PSA when income exceeds basic rate

Answer 26

£500

Question 27

What is the PSA when income exceeds higher rate

Answer 27

£ nil

Question 28

Ordinary rate for dividend income

Answer 28

8.75%

Question 29

Upper rate for dividend income

Answer 29

33.75%

Question 30

Additional rate for dividend income

Answer 30

39.35%

Question 31

What type of income is taxed at the starting rate band

Answer 31

savings income