Topic 3 Flashcards
What makes you a UK resident?
183 days in a TAX Year( actual presence)
Income tax?
Income, dividends, interest and all other income from investment
Not assessable tax?
First £30k redundancy pay
First £3k shares on incentives scheme
Income from ISA’s
Gambling, lottery tickets
Presents
Personal allowances on income tax
£12,570 on everyone
Over £100k reduced by £1 for every £2 over ( £110.000- 10k over is £5000 taken away from allowance)
Personal savings allowance
£1000 on basic rate tax payer
£500 on high rate tax payer
Dividend allowance
£2000
Allowances for property and trading income
£1000 for micro-entrepeneurs
Deduction before tax
Pension contribution
Allowable expenses
Charitable contributions
Taxation on PAYE
Taxes on gross amount:
20% - £37,700
40% - £37,001-£150,000
45%- £150,000 and above
Taxable income
Personal allowances already taken off
-£12,570
How do sole traders pay tax?
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
Investment income
Deducted at source
Order of tax applied
1: income
2: savings
3: dividends
4: gains on life assurance policy
Types of National insurance
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)
Capital Gaines tax
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)
Capital Gaines tax exemptions
Allowance is £12,300
Taxed at 10% for BRT
20% for HRT
Exemptions cant be carried out but LOSSES can
Exempt from capital gains tax
Main residence
GILTS and bonds
Private vehicles
Personal items valued less than £6000
ISA’s, CTF and PEP
Lottery winnings
How to calculate CGT
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
CGT calculations continued
Additional 8% if not personal residence ( landlords)
Business asset disposable relief
You have to have at least 5% shares
Rollover relief for businesses
If you replace the asset with another asset it can be postponed
Inheritance tax
£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
Inheritance tax calculation
325 k X 2 (650k)
175k X 2 ( 350k)
Chargeable lifetime transfers
IHT is charged at 20%
It must be paid immediately
Exemptions of IHT
Between spouses
Gifts to political parties
Wedding gifts
VAT
20%
food, children clothes, domestic water supply, medicine, booked at 0%
Exemptions: loans, insurance, health,e-books and education services
Stamp duty
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
