Tax Flashcards
What are the income tax rates?
Basic = 0-37.5k = 20%
Higher rate = 37.5k - 150k = 40%
Additional rate = 150 up = 45%
What is the starting savings rate?
What is the rate for basic rate payers and higher tax payers?
starting savings rate 0-5k = 0%
Basic = £1000 tax free allowance
Higher = £500 tax free allowance
Additional rate - £0 tax free allowance
What is the dividend allowance for all tax payers?
£2000
Who pays class 1 NICs?
Employees under state pension working in the UK
What is CGT for investors?
Capital Gains Tax is 10% (18% for residential property) for investors at the basic rate, and 20% (28% for residential property) for higher and additional rate payers (a portion is not subject to CGT (the annual exempt amount)
Only net chargeable gains are taxable (i.e. chargeable gains less capital losses)
What is IHT? What is the ‘nil rate band’?
Inheritance tax only applies if the taxable value of a person’s estate when they die is over £325,000 (nil rate band) (additional £150,000 if a main residence is inherited by children or grandchildren)
What is the rate of IHT?
40% on anything above the current nil rate
What happens when one person in a marriage or civil partnership dies?
They can transfer their nil rate band to the estate of the surviving spouse or civil partner
What is a PET?
A Potentially Exempt Transfer is a lifetime gift that is free of IHT if the person who makes the gift lives for seven years after the gift is made
If they keep using it, it is a “gift with reservation”
What is the significance of residents?
Residence and domicile are different concepts and may influence tax status - a person may be a UK resident but not UK domiciled, or vice versa
What is SDLT?
Stamp Duty Land Tax is a self-assessed tax on land transactions involving any estate, interest, right or power in or over land in the UK. In Scot and Wales, LBTT and LTT, respectively, apply instead of SDLT
How to pension contributions get tax relief?
Tax relief is at the taxpayer;s marginal tax rate
What is a PCLS?
A pension commencement lump sum of up to 25% can be taken from a pension fund upon retirement
How are ISAs taxed?
Investments held within an Individual savings accounts are exempt from tax
What is the particular tax arrangement for collective investment schemes?
They are exempt from tax on gains made within the fund.
- Disposals of units/shares in collective investment are subject to CGT
