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RO2 keys > Tax > Flashcards

Tax Flashcards

1
Q

3 Taxable NS&I products

A

Direct saver

Income bonds

Investment account

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2
Q

6 tax free NS&I products

A

Direct ISA
Junior ISA
Premiums bonds
Fixed interest savings certificates
Index linked savings certificates
Children’s bonds

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3
Q

Index linked GILT income and gains tax rules

A

Income is taxable
Gains are CGT free

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4
Q

Repo market

A

Market for selling all ready owned GILTS

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5
Q

Stamp duty tax on shares

A

0.5% of purchase price then rounded to next £5 for paper then to the nearest penny for paperless

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6
Q

Panel on takeover merged levy

A

Flat £1 fee on all trades (both purchases and sales) of £10k or more

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7
Q

Dividend allowance

A

£2k

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8
Q

Dividend tax bands

A

Basic rate tax payer - 8.75%
Higher rate tax payer - 33.75%
Additional rate tax payer - 39.35%

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9
Q

SDLT threshold and charge on rentals

A

£125k for resi. and £150k for commercial rent received over term of lease. Then charges 1%.

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10
Q

SDLT additional charge for BTL or second home

A

Additional 3% on purchases over £40k

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11
Q

Additional charge of SDLT for non UK resident

A

Additional 2% for purchases over £40k

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12
Q

Rent a room relief 2 options for declaring tax

A

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

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13
Q

How is a unit trust taxed regarding CGT?

A

No CGT for fund but CGT due for investor

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14
Q

Unit trust taxation and OEIC rules - what is a equity fund and non equity fund

A

Equity fund - Less than 60% of its assets in interest bearing securities

Non equity fund - Over 60% of assets in interest bearing securities

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15
Q

For a trust fund how is an equity fund and non equity fund taxed regarding corporation tax?

A

Equity - taxed at 20% on interest income received

Non equity - fund itself suffers corporation tax at 20% on interest but relievable for the investor

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16
Q

Dividend tax for tax brackets

A

Additional - 39.35%
Higher - 33.75%
Basic - 8.75%

17
Q

Equalisation payment

A

Partial refund of capital invested into a trust, so is not subject to income tax

18
Q

Do authorised unit trusts pay CGT?

A

No they’re exempt, they pass this to the unit holders

19
Q

When is there an 8% CGT surcharge?

A

For second properties

20
Q

Annual CGT exemption

A

£12,300

21
Q

What is bed and breakfasting regarding CGT?

A

Selling and buying an asset within a short space of time to avoid CGT liability

22
Q

Any sale and repurchase of the same asset is ignored for CGT purpose when done within how many days?

A

30 days

23
Q

How are investment trusts taxed?

A

Same as equity unit trusts

24
Q

What are the qualifying rules for a policy to make it a qualifying policy?

A

-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
25
Q

What is a qualifying policy and no qualifying?

A

Qualifying - Beneficial tax rules

Non-qualifying - subject to tax rules

26
Q

At what points are gains taxable on a non-qualifying policy?

A

Death
Assignment
Maturity
Part surrender
Surrender

27
Q

When is a bond taxable?

A

When the clients income is in or pushed into the higher rate tax bracket

28
Q

Top slicing

A

Average tax charge out over the term of the policy

29
Q

Offshore bond ‘gross roll-up tax’

A

The fund itself suffers no taxation when putting in to bond but no allowance for tax when withdrawing from bond

30
Q

Tim apportionment of tax

A

Tax only paid on period for when resident in uk

31
Q

What to do if claim of tax is ‘wholly disproportionate’ to actual gain? And time frame must do this within?

A

Ask for this to be reviewed by HMRC but must be done within 4yrs from when original gain arose

32
Q

How to cash an endowment

A

Must be cashed with original life office that issued it

33
Q

Qualifying endowment policy tax rules

A

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

34
Q

Non Qualifying endowment policy tax rules

A

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

35
Q

How are insurance company bonds taxed

A

Tax on income and CGT within fund at 20%

36
Q

Any tax or capital gains tax on purchased life annuities?

A

None other than tax on interest element of savings income

RO2 keys (13 decks)

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