Topic 4 Flashcards
UK Taxation 2
Ashok made a potentially exempt transfer in January 2020, but died in November 2024. What percentage of the IHT on the gift would be payable?
a) 20%.
b) 40%.
c) 60%.
d) 100%.
c) 60%.
He died between 4 and 5 years from the gift, therefore there is a 40% reduction of IHT.
Clare and Clive are getting married. Their parents and grandparents have agreed to give them money as a wedding gift. How much could they receive without causing any tax problems for themselves or anyone else?
a) £10,000.
b) £20,000.
c) £40,000.
d) £80,000.
c) £40,000.
Each has 2 parents x £5,000 = £10,000, plus 4 grandparents x £2,500 = £10,000, so Clare and Clive can receive a total of £20,000 each as wedding gifts from their parents and grandparents.
Karen made a loss of £5,000 when she sold some shares, but did not make any other gains in the tax year. Assuming the capital gains tax exemption was £12,300 for that tax year, what is the total amount she could carry forward to use against gains in the following tax year?
a) £2,500.
b) £5,000.
c) £12,300.
d) £17,300.
b) £5,000.
She can carry forward all losses but not the annual exemption.
Which of the following would not be exempt or zero-rated for VAT?
a) Financial advice.
b) Children’s clothes.
c) Books.
d) Domestic water.
a) Financial advice.
Dan left £93,000 to his son on his death, leaving the balance of his estate to his wife Joan. At the time of his death the IHT nil-rate band was £310,000. When Joan died, she left her entire estate of £800,000 to their son, having not made any other gifts previously. On Joan’s death the IHT nil-rate band was £325,000. How much of Joan’s estate would be subject to IHT?
a) £150,000.
b) £247,500.
c) £475,000.
d) £542,000.
b) £247,500.
Dan used 30% of his NRB, so Joan inherits 70%, uprated to the NRB at the time of her death. £325,000 x 170% = £552,500. £800,000 - £552,500 leaves £247,500 of her estate liable to IHT.
By when must capital gains tax normally be paid on disposal of an asset?
a) On 31 January following the end of the tax year in which the gain is made.
b) In two instalments on 31 January and 31 July following the end of the tax year in which the gain is made.
c) By the end of the tax year in which the gain is made.
d) On 31 July following the end of the tax year in which the gain is made.
a) On 31 January following the end of the tax year in which the gain is made.
Which of the following is true in relation to the residence nil-rate band (RNRB)?
a) Any unused RNRB cannot be transferred to a spouse on death.
b) The RNRB is reduced if the value of the estate exceeds £1m.
c) It is available even if the deceased never lived in the property.
d) It applies to property left to the spouse or direct descendants of the deceased.
d) It applies to property left to the spouse or direct descendants of the deceased.
Which of the following would not be subject to corporation tax?
a) Limited liability partnership.
b) A football club.
c) A housing association.
d) A small limited company
a) Limited liability partnership.
Gains from which of the following would be exempt from capital gains tax?
a) Corporate bonds.
b) Holiday home.
c) Unit trusts.
d) Shares.
a) Corporate bonds.
Alan owns shares in a small company that has share capital of £200,000, and now wants to sell them. In order to be able to claim business asset disposal relief, Alan’s shareholding must be worth at least:
a) £5,000.
b) £10,000.
c) £50,000.
d) £100,000.
b) £10,000.
Alan must own at least 5% of the firm’s share capital to be able to claim business asset disposal relief.
Personal belongings with a value of no more than £6,000 are exempt from capital gains tax.
True or False?
True
Which of the following statements is correct?
a) Inheritance tax : It is payable on the profit made on the disposal of certain assets.
b) Inheritance tax : All transfers between spouses are exempt.
b) Inheritance tax : All transfers between spouses are exempt.
Which of the following statements is correct?
a) Capital gains tax : All transfers between spouses are exempt.
b) Capital gains tax : It is payable on the profit made on the disposal of certain assets.
b) Capital gains tax : It is payable on the profit made on the disposal of certain assets.
When shares are purchased using an electronic trading system, the:
a. buyer pays stamp duty reserve tax.
b. buyer pays VAT.
c. share transfer can be registered before the documents are stamped.
d. transaction will not be subject to stamp duty reserve tax.
a. buyer pays stamp duty reserve tax.
For a UK resident, which of the following personally owned assets would be exempt from capital gains tax?
a. A piece of personal jewellery valued at £20,000.
b. A Spanish property used for holiday visits.
c. Euros held for use on foreign holidays.
d. Shares purchased on the UK stock market.
c. Euros held for use on foreign holidays.
