Tax Flashcards
3 Taxable NS&I products
Direct saver
Income bonds
Investment account
6 tax free NS&I products
Direct ISA
Junior ISA
Premiums bonds
Fixed interest savings certificates
Index linked savings certificates
Children’s bonds
Index linked GILT income and gains tax rules
Income is taxable
Gains are CGT free
Repo market
Market for selling all ready owned GILTS
Stamp duty tax on shares
0.5% of purchase price then rounded to next £5 for paper then to the nearest penny for paperless
Panel on takeover merged levy
Flat £1 fee on all trades (both purchases and sales) of £10k or more
Dividend allowance
£2k
Dividend tax bands
Basic rate tax payer - 8.75%
Higher rate tax payer - 33.75%
Additional rate tax payer - 39.35%
SDLT threshold and charge on rentals
£125k for resi. and £150k for commercial rent received over term of lease. Then charges 1%.
SDLT additional charge for BTL or second home
Additional 3% on purchases over £40k
Additional charge of SDLT for non UK resident
Additional 2% for purchases over £40k
Rent a room relief 2 options for declaring tax
Declare costs as standard and claim back expenses
OR
Claim rent a room relief and the first £7,500 is tax free but then taxable above this and now expenses can be claimed for
How is a unit trust taxed regarding CGT?
No CGT for fund but CGT due for investor
Unit trust taxation and OEIC rules - what is a equity fund and non equity fund
Equity fund - Less than 60% of its assets in interest bearing securities
Non equity fund - Over 60% of assets in interest bearing securities
For a trust fund how is an equity fund and non equity fund taxed regarding corporation tax?
Equity - taxed at 20% on interest income received
Non equity - fund itself suffers corporation tax at 20% on interest but relievable for the investor
Dividend tax for tax brackets
Additional - 39.35%
Higher - 33.75%
Basic - 8.75%
Equalisation payment
Partial refund of capital invested into a trust, so is not subject to income tax
Do authorised unit trusts pay CGT?
No they’re exempt, they pass this to the unit holders
When is there an 8% CGT surcharge?
For second properties
Annual CGT exemption
£12,300
What is bed and breakfasting regarding CGT?
Selling and buying an asset within a short space of time to avoid CGT liability
Any sale and repurchase of the same asset is ignored for CGT purpose when done within how many days?
30 days
How are investment trusts taxed?
Same as equity unit trusts
What are the qualifying rules for a policy to make it a qualifying policy?
-min 10yrs
- Premiums must be paid atleast annually and cannot exceed double price of any other year and cannot be more than 1/8 of total premiums paid annually
- contributions a max. of £3,600
- surrendering the policy within 10yrs makes it non-qualifying
What is a qualifying policy and no qualifying?
Qualifying - Beneficial tax rules
Non-qualifying - subject to tax rules
At what points are gains taxable on a non-qualifying policy?
Death
Assignment
Maturity
Part surrender
Surrender
When is a bond taxable?
When the clients income is in or pushed into the higher rate tax bracket
Top slicing
Average tax charge out over the term of the policy
Offshore bond ‘gross roll-up tax’
The fund itself suffers no taxation when putting in to bond but no allowance for tax when withdrawing from bond
Tim apportionment of tax
Tax only paid on period for when resident in uk
What to do if claim of tax is ‘wholly disproportionate’ to actual gain? And time frame must do this within?
Ask for this to be reviewed by HMRC but must be done within 4yrs from when original gain arose
How to cash an endowment
Must be cashed with original life office that issued it
Qualifying endowment policy tax rules
Income tax - seller and buyer- must have been in place for 10+ yrs or 3/4 of term
CGT - Seller and buyer - No CGT on sale providing we’re original owners
Non Qualifying endowment policy tax rules
Income tax - seller - taxed based on sale price - premiums paid
Income tax - buyer - taxed based on maturity vale - premiums paid
CGT - Seller and buyer - No CGT on sale providing we’re original owners
How are insurance company bonds taxed
Tax on income and CGT within fund at 20%
Any tax or capital gains tax on purchased life annuities?
None other than tax on interest element of savings income
