Topic 3: Key Words Flashcards
UK tax resident
Someone who lives in the UK for 183 or more days in a tax year. If they live in the UK for less than 183 days, a Statutory Residence Test is carried out to see if they should be considered a UK tax resident.
Domicile
The country considered to be an individual’s home by the tax authorities. It is usually their father’s domicile, or their mother’s domicile if the parents were not married.
Deemed domicile – someone who is not UK‑domiciled but has been a UK tax resident for 15 of the previous 20 tax years.
Domicile of choice – it is possible to change from UK domicile by moving abroad and permanently severing all ties with the UK – it takes a long time and can be challenged.
Gift Aid
Can apply to gifts made by a tax payer to a registered UK charity. The gift is made net of basic rate tax, and the charity can reclaim the tax deducted. So, if basic rate tax is 20%, the individual pays £80 and completes a Gift Aid declaration. The charity can claim £20 income tax, giving a total donation of £100.
The New Act
a bill gone through Parliament and has received Royal Assent
Fiscal year
tax year
CGT-Capital Gains Tax
Tax payable on the gain made when certain assets (e.g. personal property above a specific value, or business asset) are disposed of, usually by selling or gifting them
IHT
Inheritance Tax
Reciprocal tax treaties
known as double taxation agreement. Ensures a person is not tax twice on the same income and gains.
Earned income
income from employment or self-employment (profits, salary, tips, commission, bonuses and pension benefits)
Unearned income
income that is not derived from employment or self-employment (interest/dividends from investments, rental income, trust income, etc)
Personal allowance
an amount of income that can be received each year before income tax begins to be charged
