UK Taxation II Flashcards
In July 2016, Joan made a gift to her daughter of £350,000. She has made no other gifts in her lifetime. Joan died in in October 2020 leaving a total estate worth £420,000. The full rate of IHT in 20/21 is 40% on estates over £325,000. How much IHT is applied to the value of the gift that is in excess of the nil-rate band (£25,000)
A) £5,000
B) £6,000
C) £8,000
D) £10,000
B) £6,000
In the first instance, the gift uses the available nil rate band of £325,000, there is an excess of £25,000. Joan died between year 4-5 after the gift. So the £25,000 excess is liable for IHT at 60 per cent of the full rate.
Melanie bought a painting in a charity shop for £40. It turned out to be a well known artist and she sold it three years later for £2000. She had to pay capital gains tax on the gain she made. True or false?
False
Gains made on chattels (moveable objects like jewellery, antiques, and paintings) are exempt from CGT if their value is £6,000 or less.
For how many years can the annual exempt amount for CGT be carried forward?
The annual exempt amount can not be carried forward.
To qualify for roll-over relief, a business must replace an asset not more than 5 years from the date if disposal, true or false?
False
Assets must be replaced not more than 3 years after the date of disposal.
Inheritance tax would be charged on which if the following?
A) the total value of the deceased’s estate.
B) the total value of the estate above the available nil-rate band
C) the value of the estate less any gifts that have been made in the previous 7 years.
B)
Tax on chargeable lifetime transfer in excess of the available nil-rate band is payable?
A) immediately, at the full rate
B) only if the transferor dies within seven years of the teansfer
C) immediately, at a reduced rate
C) immediately at a reduced rate of 20%
What kind of tax is payable when shares are purchased electronically?
Stamp duty reserve tax
Sanjay, a basic rate taxpayer with taxable income of £12,000 purchased a UK listed company shares for £11,300 in May 2014. He sold them for £25,400 in August 2020. He has no other gains or losses in the tax year 20/21. Ignoring any costs calculate his capital gains tax liability?
Gain £25,400 - £11,300 = £14,100
Taxable gain: £14,100 - £12,000 = £2,100
Capital gauns payable: £2,100 x 10% = £210
Sarah, a basic rate taxpayer with earned income of £17,000 in 20/21, bought some shares in May 2016 for £15,000 and sold them in October 2016 for £10,100 making her a loss of £4,900 in the tax year 16/17.
She made no gains in the same tax year. In June 2020, she sold her holiday flat in Devon, which amde her a profit of £47,600. She had spent £14,000 on renovations, amd it cost her £3,500 in estate agents commission to sell it. Calculate the Capital gains tax due for the tax year 20/21
Gain in Flat - £47,600 Less renovations (£14,000) Less cost of disposal (£3,500) Less annual exempt amount (£12,000) Lee carried forward loss from 16/17 (£4,900)
Taxabale gain £13,200 x 18% = £2,376 capital gains tax
Note that a rate of 18% applies as the gain was from the disposal of property.
Luis sold his studio flat and bought an apartment (his only property) for £325,000. How much stamp duty if any will he pay?
A) £6,250
B) £2,500
C) £3,750
D) £0
A) £6,250
No tax is payable on the first £125,000. Tax is payable at 2% on the portion between £125,000 - £250,000 (£125,000 x 2% = £2,500).
Tax is payable at 5% on the portion between £250,001 and the purchase price of £325,000 (£75,000 x 5% = £3,750). Total SDLT = £6,250.
A company makes an annual profit of £1.2 million. When would the company’s corporation tax normally be payable?
Nine months after the end of the relevant accounting period.
What are the rates if Dividend tax?
Dividened allowance (DA) £2000 not taxed. Then -
- 5% for basic rate payer
- 5% for higher rate payer
- 1% for additional rate payer
