Topic 3

Question 1

What makes you a UK resident?

Answer 1

183 days in a TAX Year( actual presence)

Question 2

Income tax?

Answer 2

Income, dividends, interest and all other income from investment

Question 3

Not assessable tax?

Answer 3

First £30k redundancy pay
First £3k shares on incentives scheme
Income from ISA’s
Gambling, lottery tickets
Presents

Question 4

Personal allowances on income tax

Answer 4

£12,570 on everyone
Over £100k reduced by £1 for every £2 over ( £110.000- 10k over is £5000 taken away from allowance)

Question 5

Personal savings allowance

Answer 5

£1000 on basic rate tax payer
£500 on high rate tax payer

Question 6

Dividend allowance

Answer 6

£2000

Question 7

Allowances for property and trading income

Answer 7

£1000 for micro-entrepeneurs

Question 8

Deduction before tax

Answer 8

Pension contribution
Allowable expenses
Charitable contributions

Question 9

Taxation on PAYE

Answer 9

Taxes on gross amount:
20% - £37,700
40% - £37,001-£150,000
45%- £150,000 and above

Question 10

Taxable income

Answer 10

Personal allowances already taken off
-£12,570

Question 11

How do sole traders pay tax?

Answer 11

They pay tax on NET profit
Turnovers - capital allowances and allowable business expenses
Deadline 31 Jan for online returns
Pay in 2 installments: 31 Jan and 31 July

Question 12

Investment income

Answer 12

Deducted at source

Question 13

Order of tax applied

Answer 13

1: income
2: savings
3: dividends
4: gains on life assurance policy

Question 14

Types of National insurance

Answer 14

Class 1: PAYE - 12% paid by employees and 13,8% paid by employers ( primary and upper threshold)
Class 2 &4: self employed flat rate (2)
Additional based on profit
Class 3: voluntary contributions (affects pension)

Question 15

Capital Gaines tax

Answer 15

Payable on NET gain made of disposable assets.
Paid on 31jan after the year tax is made in ( between 22/23 paid on 31 Jan 2024)

Question 16

Capital Gaines tax exemptions

Answer 16

Allowance is £12,300
Taxed at 10% for BRT
20% for HRT
Exemptions cant be carried out but LOSSES can

Question 17

Exempt from capital gains tax

Answer 17

Main residence
GILTS and bonds
Private vehicles
Personal items valued less than £6000
ISA’s, CTF and PEP
Lottery winnings

Question 18

How to calculate CGT

Answer 18

Purchase price: 10000
Selling price: 30000
Gain: 20000
Minus exemptions 12300
Equals: 7700 X 10%

You can add the cost of purchase to the price and cost of selling to it in order to reduce CGT
Can deduct improvements but not Repairs

Question 19

CGT calculations continued

Answer 19

Additional 8% if not personal residence ( landlords)

Question 20

Business asset disposable relief

Answer 20

You have to have at least 5% shares

Question 21

Rollover relief for businesses

Answer 21

If you replace the asset with another asset it can be postponed

Question 22

Inheritance tax

Answer 22

£325k per person , £650k if married( can be passed on to the spouse)
Additional £175k to a direct descendant if married and it’s a residential

Question 23

Inheritance tax calculation

Answer 23

325 k X 2 (650k)
175k X 2 ( 350k)

Question 24

Chargeable lifetime transfers

Answer 24

IHT is charged at 20%
It must be paid immediately

Question 25

Exemptions of IHT

Answer 25

Between spouses
Gifts to political parties
Wedding gifts

Question 26

VAT

Answer 26

20%
food, children clothes, domestic water supply, medicine, booked at 0%
Exemptions: loans, insurance, health,e-books and education services

Question 27

Stamp duty

Answer 27

On purchase of security and land
0%- 0- 125k
2%- 125k to 250
5% - 250 k to 925
10% - 925k 1500k
12%- 1500 k and above