Tax Flashcards
What does SDLT include?
SDLT based on the VAT inclusive amount of the purchase price = buyers pay tax on tax.
What is nil rate band for SDLT?
first £125,000 of purchase price.
What is first time buyer relied for SDLT?
Will pay 0% on first £300,000 and 5% on amounts above that up to £500,000.
Note: relief only available to first time buyers if purchase price doesn’t exceed £500,000
What is owed for SDLT if additional residential property?
If already owns residential property and buys an additional residential property an additional 3% is added to each tax band so nil rate band taxed at 3% etc.
What happens for linked transactions in SLDT?
e.g. buying a building with four flats can opt to pay tax on average consideration per dwelling rather than entire consideration.
If person buys 6 or more residential properties in a single transaction what can they choose to do?
apply non-residential property rates which are lower than the residential rates
Basis of SDLT charge nil rate band in England for non-residential freehold property?
Nil rate band first £150,000 of purchase price.
What is LTT nil rate band?
First £225,000 for residential properties and non-residential land and property.
What is first-time buyers relief for LTT?
No first-time buyers relief in Wales
What constitutes a taxable supply in VAT?
VAT charged on any supply of goods or services made in the UK (unless the supply is exempt) if the supply is made by a taxable person whilst carrying on business.
Contract to construct a building is subject to tax at 20% automatically.
Differences between standard, exempt and zero-rated supplies in VAT?
Standard VAT rate is 20%
Exempt supplies include – land, insurance, financial services, education, health services or postal services.
Supply of food, books and newspapers, water and sewer services and residential construction are technically subject to VAT but the tax rate is 0%
A reduced VAT rate of 5% applies to domestic fuel, installation of energy saving materials and child car seats.
Reasons why a client would make an option to tax VAT and the effect that has?
Sale or lease of land is normally a supply exempt from VAT but the owner of a commercial property may opt to charge VAT so that they may recover their input tax (for example: VAT owner pays in connection with heating, cleaning and repairs).
Option to tax may be revoked within 6 months of the election if they haven’t collected any VAT yet otherwise cannot be revoked for 20 years and then HMRC’s consent is required.
Note: option to tax does not apply to residential land and buildings.
What is the basis for CGT?
Capital gain is the profit when a capital asset is disposed of.
A capital asset is almost every kind of property including land and buildings. This doesn’t include wasting chattels defined as moveable property with a life of under 50 years eg cars, watches and farm animals and machinery not used in business.
Profit is the difference between the sale price (or fair market value) and costs of acquiring the asset this includes the cost of capital improvements made to the asset.
What does principal private dwelling-house exemption for CGT do?
Exempts all/part of again on a property an individual has used as their home.
What calculation for principal private dwelling-house exemption under CGT?
If the home was always occupied during ownership 100% of the gain is exempt from CGT. If didn’t occupy the home all the time, then calculate the exempt amount by formula: gain x (period of occupation ÷ period of ownership).
