Taxation in the UK

Question 1

What is the tax year?

Answer 1

6th April - 5th April

Question 2

What are the 3 types of taxable income?

Answer 2

1. Non-savings income
2. Non-dividend savings income
3. Dividend income

Question 3

How is interest paid on corporate bonds, AUTs and OEICs?

Answer 3

NET of basic rate tax (20%)

Question 4

How is interest paid on income from an annuity?

Answer 4

NET of basic rate tax (20%)

Question 5

How is interest paid on a gilt?

Answer 5

Gross but can elect to receive net

Question 6

How is interest paid on an NS&I product?

Answer 6

Gross

Question 7

How is interest paid on bank and building society income?

Answer 7

Gross

Question 8

How is interest paid on proceeds on qualifying life assurance policies?

Answer 8

Gross

Question 9

How is dividend income paid?

Answer 9

Gross

Question 10

What is the basic tax-free allowance?

Answer 10

£12,570

Question 11

How does your tax-free allowance change as your salary exceeds £100,000

Answer 11

Reduced by £1 for each £2 over £100,000 and completely lost when income exceeds £125,140

Question 12

What is the basic tax-free allowance on savings income?

Answer 12

£1000

Question 13

What is the higher rate tax-free allowance on savings income?

Answer 13

£500

Question 14

What is the additional rate tax-free allowance on savings income?

Answer 14

No allowance

Question 15

What is the dividend income allowance for all taxpayers?

Answer 15

£1,000

Question 16

What are the income tax rates for the below:
Starting rate for savings (no salary):
Basic rate:
Higher rate:
Additional rate:

Answer 16

0%
20%
40%
45%

Question 17

What are the income tax salary brackets for the below:
Starting rate for savings (no salary):
Basic rate:
Higher rate:
Additional rate:

Answer 17

£0-5,000
£0-37,700
£37,701-125,140
Over £125,140

Question 18

What are the tax rates of dividend income tax for the below:
Basic rate:
Higher rate:
Additional rate:

Answer 18

8.75%
33.75%
39.35%

Question 19

The maximum limit of pension contribution tax relief is the higher of:

Answer 19

Relevant annual earnings in a tax year subject to an annual cap of £60,000
A basic amount of £3,600

Question 20

How does pension contribution tax relief work for salaries above £260,000?

Answer 20

The £60,000 allowance reduces by £1/£2 until it reaches a minimum of £10,000

Question 21

How does charity donation tax relief work?

Answer 21

Relief at the taxpayer’s marginal tax rate

Question 22

What are class 1 NICs?

Answer 22

Paid by employees on their earnings

Question 23

What are class 1A NICs?

Answer 23

Paid by an employer if employee received taxable benefits from their employment, such as a company car

Question 24

What are class 1B NICs?

Answer 24

Paid by an employer if they have entered into a PAYE settlement agreement with HMRC

Question 25

What are class 2 NICs?

Answer 25

Paid by self-employed if their earnings are between a small profits threshold and lower profits limit

Question 26

What are class 3 NICs?

Answer 26

Voluntary contributions that people with very low salaries can pay to help fill gaps on their NIC record

Question 27

What are class 4 NICs?

Answer 27

Paid by self-employed if they earn over a certain amount each year

Question 28

What is capital gains tax?

Answer 28

Tax paid on the sale of an asset, such as shares, property, and foreign currency (not for personal use)

Question 29

What assets are exempt from CGT?

Answer 29

- Main home - Cars - Assets held in ISAs - National savings/Investments property - Betting and Lottery winnings - UK government and most corporate debt - Enterprise Investment Schemes - Foreign currency for PERSONAL use

Question 30

What are the capital gains tax rates for: Basic-rate taxpayers Higher and additional rate taxpayers

Answer 30

10% 20%

Question 31

What are the capital gains tax rates for: Basic-rate taxpayers selling residential property Higher and additional rate taxpayers selling residential property

Answer 31

18% 28%

Question 32

What is the CGT rate paid on the disposal of certain business assets?

Answer 32

10%

Question 33

What is the annual exemption for CGT?

Answer 33

£6000 Capital losses can also be deducted from the gains before tax is applied OR carried forward indefinitely

Question 34

What are some planning strategies for avoiding CGT tax?

Answer 34

- Spouse transfer - Phased disposal - Bed and breakfast

Question 35

When is the hardcopy of tax returns submitted by?

Answer 35

31st October following end of tax year

Question 36

When is the electronic copy of tax returns submitted by?

Answer 36

31st January following end of tax year

Question 37

What is the nil rate band for inheritance tax?

Answer 37

£325,000

Question 38

What is the inheritance tax rate?

Answer 38

40%

Question 39

What is the inheritance tax rate if > 10% of estate is left to charity?

Answer 39

36%

Question 40

What is the inheritance tax rate if chargeable lifetime transfers are in excess of nil rate band?

Answer 40

20%

Question 41

Which items are exempt from inheritance tax?

Answer 41

Potentially exempt transfers (PETS) if donor lives for SEVEN years after gift Gifts to spouse/civil partner Gifts to charities Wedding gifts (up to £5000) Annual exemption of £3000

Question 42

What are the conditions for a Part A automatically non-resident? - Visit UK fewer than ___ days in a tax year - Non resident in previous ___ years and visit UK for fewer than ___ days in the tax year - Work full-time overseas and visit UK for fewer than ___ days in the tax year (with no more than ___ days working in the UK)

Answer 42

16 days 3 years, 46 days 91 days, 30 days

Question 43

What are the conditions for a Part B automatically resident? Part A doesn't apply and.... Present in the UK for ___ days or more in the tax year Own a home in the UK for at least ___ days and lived there for at least ___ days in the tax year Work full time in the UK

Answer 43

183 days 91 days, 30 days

Question 44

What are the conditions for a Part C sufficient ties test?

Answer 44

Neither part A or B apply... further tests based on family, work, and accommodation

Question 45

Define domicile?

Answer 45

Where a person has their permanent home

Question 46

What is a domicile of origin?

Answer 46

Acquired

Question 47

What is a domicile of choice?

Answer 47

Can be acquired from the age of 16

Question 48

Which income/gains are taxed as a UK resident and UK domicile?

Answer 48

Worldwide

Question 49

Which income/gains are taxed as a non-UK resident?

Answer 49

Income/gains arising in the UK

Question 50

Which income/gains are taxed as a UK resident and non-UK domicile?

Answer 50

Remittance basis - income/gains are taxed if brought back to the UK

Question 51

How does inheritance tax work for assets belonging to: UK domicile: Non-UK domicile:

Answer 51

UK domicile: Worldwide assets Non-UK domicile: UK assets

Question 52

Stamp Duty Land Tax (SDLT) is by slice of the purchase price. Residential: £0-250,000 £250,001-925,000 £925,001-1,500,000 Over £1,500,000

Answer 52

0% 5% 10% 12%

Question 53

Stamp Duty Land Tax (SDLT) is by slice of the purchase price. Residential: £0-150,000 £150,001-250,000 Over £250,000

Answer 53

0% 2% 5%

Question 54

What is the anti-avoidance rate for collective investment schemes and companies buying residential properties valued above £500,000?

Answer 54

15%

Question 55

What is Stamp Duty Reserve Tax (SDRT)?

Answer 55

Tax paid on paperless transactions when an investor buys: UK listed shares Foreign shares with a register in the UK Option to buy shares Rights arising from shares already owned

Question 56

Which shares are exempt from SDRT?

Answer 56

AIM or AQSE listed shares Unit trusts OEICs ETFs

Question 57

What rate of corporation tax is applied on profits of £50,000 or less?

Answer 57

19%

Question 58

What rate of corporation tax is applied on profits of £250,000 or more?

Answer 58

25%

Question 59

What rate of corporation tax is applied on profits of £50,000 - £250,000?

Answer 59

First £50,000 charged at 19%, rest charged at 26.5%

Question 60

What can be offset against profit and gains?

Answer 60

Trading losses

Question 61

How often do large companies (profits > £1.5m) pay their corporation tax?

Answer 61

Quarterly

Question 62

How often do smaller companies pay their corporation tax?

Answer 62

Nine months and one day after the accounting year end

Question 63

What is the standard VAT rate?

Answer 63

20%

Question 64

What is the reduced VAT rate? (e.g. electricity, gas)

Answer 64

5%

Question 65

What is the zero VAT rate? (e.g. children's clothes, books) not a trick q

Answer 65

0%

Question 66

How much VAT is charged for financial advice?

Answer 66

standard rate - except advice on sale of retail investments where VAT is exempt

Question 67

At retirement, how much of your pension fund can be claimed tax-free?

Answer 67

25%

Question 68

What is the maximum fund value for a pension allowance?

Answer 68

£1,073,100

Question 69

If the maximum fund value for a pension allowance is exceeded, how much tax is charged on the rest if taken as: a) income b) lump sum

Answer 69

a) 25% b) 55%

Question 70

What is the annual contribution limit on a stocks and shares and/or cash ISA?

Answer 70

£20,000

Question 71

What is the annual contribution limit on a junior ISA?

Answer 71

£9,000

Question 72

Which of income tax or CGT is charged on investments into ISAs?

Answer 72

NEITHER

Question 73

What are the tax rules for fund collective investment schemes?

Answer 73

Exempt on gains within fund Income subject to corporation tax at 20%

Question 74

Where funds hold more than ___ in interest-bearing securities, distributions are treated as interest

Answer 74

60%

Question 75

What are the tax rules for life insurance funds?

Answer 75

Gains and income subject to corporation tax at 20%

Question 76

HAVENT INCLUDED LAST TWO SLIDES