Taxation Flashcards
1
Q
What is the importance between tax free and 0% tax
A
- Personal Savings allowance is 0% tax not tax free and will use up personal allowance if any interest is earned.
- Any interest earned could push the client into another tax bracket
- Whereas an ISA which is tax free, any savings interest will not affect personal allowance are added to a clients income.
- ISA income no matter much it is would not push clients income into another tax bracket or use up allowance.
2
Q
Assets exempt from CGT
A
- ISAs immediately
- VCT immediately
- EIS after three years of holding
- Investment bonds - unless acquired for consideration
- Assignment of bond to family or spouse
- Gilts
- Certain qualifying coporate bonds under HMRC rules and bought directly from issuer
- Assets that are given away by business owner are not subject to CGT fo for them when using hold over relief, but will be payable by the person they give the assets to when they dispose of them
- Transfers between spouses
- Gifts to political parties
- Gifts to charities
- Gifts of money to anyone
3
Q
Assets exempt from income tax
A
- ISAs, JISA’s & CLT
- Pensions
- National savings certificates
- NS&I premium bonds
- Friendly society regular savings interest £270 or lump sum interest up to £300
- VCT dividiend income tax free
- Income from rent a room scheme up to £7500
4
Q
Assets exempt from IHT
A
- Any BR AIM companies/unlisted/certain farmland/building owned for at least two years
- Other busines assets 50% relief
- EIS after holding for 3 years
- Any pension wrapper
- Transfer/gifts to spouse
- Gifts to anyone else after 7 years
- Gifts to charities and political parties
- Trusts after 7 years
- Discounted Gift Trust, discount and any growth immediately and the rest of funds after 7 years
- Educational Trust
- Loan Trust any growth immediately
- Gifts from surplus income
- Annual exemptions £3000 this year and last year if unused
- Annual small gift exemption £250
- Wedding gifts
