UK Taxation 1 Flashcards
Which of the following people would be most likely to be UK resident?
A) Susan, who normally lives in Spain but spends three months a year working for the family business in England.
B) Antoine, a French surveyor, whose eight-month contract in Devon with a construction company started in May.
C) Max, who moved to London from Cologne on 6th January for a seven-month teaching contract.
D) Brenda, who spends 180 days in the UK and the remainder in the USA.
B) is correct
C is incorrect because 3 months of Maxs contract are in one year and the rest in another. He will not spend 183 days in either tax year.
Which of the following will not be subjected to UK inheritance tax upon death?
A) A UK property owned by Paolo, who has lived in the UK for three years but is not UK domiciled.
B) overseas property owned by Kavita, who was born in the US (to American parents) but has lived in the UK for 18 years.
C) overseas proprty owned by Helena, who is UK resident but not UK domiciled not deemed domiciled.
D) overseas property owned by David, who is UK domiciled but resident in France.
C)
As Helena is not UK domiciled she will not pay IHT on overseas assets.
On which of the following would a child be subject to income tax?
A) all earned income.
B) an educational grant.
C) any earned income that exceeds their personal allowance.
D) a settlement from their parents.
C)
Any earned income thst exceeds their personal allowance.
A person who is UK resident for tax purposes only pays income tax on earnings generated in the UK. true or false?
False
They are liable for income tax on all income generated anywhere in the world, but the UK has recipricol tax treaties (double taxation agreements) with many countries to ensure that people are not taxed twice on the same income.
A person may become UK domiciled once they have been settled in the country for a number of years, true or false?
True
As long as their actions indicate that their change of residence is permanent and they have severed links with their original country of domicile.
Which of the following is not assessable for income tax purposes?
A) Tips.
B) interest from bank and building society deposits.
C) Lottery prizes
D) Rents from land and property.
C) Lottery prizes
In what order of priority is income taxed?
Non savings income
Savings income
Dividened income
Blind persons allowance can be transferred to a spouse or civil partner if the blind person does not use the allowance. True or false?
True
It can be transferred to a spouse or civil partner if the original person does not pay tax or use all of their allowance.
Emma worked abroad for 5 years but is now back working in the UK. What class of national insurance contributions could she pay to improve her contribution record for the state pension?
Class 3
Mike earns £22,000. He also receives £500 interest on his savings from a building society deposit account. Calculate the income payable.
On earnings £22,000 - £12,500 (personal allowances) = £9,500
£9,500 x 20% = £1900
There is no tax to pay on savings income because, as a basic-rate taxpayer, Mike has a personal savings allowance of £1000
Roopa is a company director, in 2020/2021 she draws a salary of £12,500. She has a dividened income of £27,000. Calculate the income tax payable
Total income £39,500
Salary falls within personal allowance so no tax paid.
£2000 of dividend income is taxable at 0 %
The remaining £25,000 all falls within the basic tax rate band and is taxed at 7.5 %
Total tax is £1875 (£25,000 x 7.5%)
Jemma is self employed and is in receipt of blind persons allowance. In 20/21 her gross profit is £20,000 amd she has allowable expenses of £2,500. She has to pay class 4 NICs at 9% on her taxable profit above £9,500, calculate the income tax and NICs payable.
£20,000 gross profit
(£2,500) Allowable expenses
(£12,500) personal allowance
(£2,450) blind persons allowance
Taxable income: £2,550
Tax £2,550 x 20% = £510
Class 4 NICs
£20,000 - £2,500 = £17,500 taxable profit
£17,500 - £9,500 x 9% = £720
Ashoks salary is £75,000and he is paid savings interest of £650. He also has a dividened income of £7,000. Calculate the income tax payable
£75,000 income
(£12,500) personal allowance
£62,500 taxable income.
£37,500 x 20% + £25,000 x 40% = £10,000
Savings
£500 (PSA) x 0% = 0
£150 x 40% = £60
Dividened
£2000 (DA) x 0% = 0
£5,000 x 32.5% = £1,625
Residency definition?
Affects income tax and capital gains tax.
Any person present in UK for at least 183 days WITHIN THE TAX YEAR.
Automatically regarded as UK resident for tax purposes.
Definition of Domicile?
Affects Inheritance Tax.
Country an individual treats as their home.
Aquired from father at birth unless unmarried then from mother.
Can change by living in another country, intending this to be permanent. Putting down roots and severing ties with former country.
