1
Q
Onshore bonds are treated as having had xxx already paid within the fund.
A
basic rate tax (20%)
2
Q
Gifts to Brothers and Spouse in relation to IHT?
A
gift to partner - exempt
gift to brother - chargeable
3
Q
VCT Facts
A
Income tax relief at 30%
Max investment £200k p.a
no cgt or income tax payable on gains from selling shares
4
Q
Can the CGT exmeption be carried forward?
A
Unused CGT allowance cannot be carried forward to the next year
5
Q
5% tax deferal rule on onshore bond, what value is used?
A
initial value of investment
6
Q
Who pays CT?
A
- LTDs and PLCs
not self employed or partnerhsips
7
Q
Corp Tax Facts
A
- Companies must pay CT within 9 months and 1 day of end of trading period.
- tax return can be filled out 12 motns after end of accounting period
8
Q
Lifetime ISA
A
max 4000 p.a
gov.mnt apply 25%
penalty before 60
9
Q
Innovative Finance ISA
A
crowdlending and p2p Inv.
min age 18
high risk
p2p not covered by FSCS
10
Q
Interest bearing fund, over xx% must be investred in intterest bearing securities
A
60%
income tax
11
Q
non reporting funds - can CGT exemption be made
A
NO
12
Q
top slicing
A
deduct 20%/25% gain made in top slice if they are higher/additional rate
13
Q
Traded endowment policies
A
- orignal holder sells policy to 3rd party
- buyer pays premiums and claims at maturity
- buyer pays CGT
- no tax due from original if held for more than 10y o 3/4 of term
14
Q
Only scenario CGT is payable on life policy?
A
traded endowment
15
Q
purchased life annuity
A
paid net of tax
basic rate no further tax to pay
R89 form for non-tax payer
16
Q
friendley society
A
Annual premiums no exceed 270
monthly premiums 25 p/m
underlying fund is tax exempt
17
Q
EIS Income Tax
A
- small single unlisted company
- 1m or 2m if knmowledge intensive
- 30% Income Tax Relief
- EIS shares need to be held for more than 3 years or HMRC claw back
18
Q
EIS IHT
A
100% IHT relief
held for more than 2 years
19
Q
SEED
A
- even smaller unlisted company
- 200k p.a
- 50% income tax relief
- CGT deferal relief 50%
20
Q
VCT
A
- collective investment in smaller companies (less risky)
- 200k p.a
- 30% IT Relief
- clawed back if held for less than 5 years
21
Q
main positive of VCT
A
- dividends paid free of IT
- disposal of shares are exempt from CGT
- however VCT dont get IHT business relief
VCT div Tax free
22
Q
IHT treatment of EIS/SEIS and VCt
A
EIS/SEIS 100% IHT business releif
VCT BR not available
23
Q
employees for EIS, SEIS and VCT
A
- EIS/VCT fewer than 250
- SEIS fewer than 25
24
Q
WHat tax are REIT exempt from?
A
corporation tax
25
REIT qualifiers
* 75% gross profits letting
* 90% of rental must be paid as dividends within 12 months of end of accounting period
26
REIT 2 distributions
* ringfenced - income from property. this is paid net of 20% tax
* non ringfenced - income from investment focused business
27
whats a PAIF
* OEIC that invest in property
* exempt from CT
28
PAIF 60 qualifiers
* 60% fund assets must be property
* 60% of income generated must come from property
29
PAIF income distrubutions
* Property income (paid net of 20% income tax).
* Interest from other investments (paid gross, but taxable).
* Dividends from other investments (paid gross, but taxable).
30
DOTAS
* registering new scheme is not HMRC approval
* use a scheme before approval APN (tax due within 90 days)
31
Bare Trust
* Beneficiaries cannot be altered
* no flexbility retained by settlor
* beneficiary over 18 can demand trustees release their entitlement and trustees have to
32
Interest in Possession Trusts
types of beneficiaries
* Remainderman is entitled to capital of the trust once the life tenant has passed away.
* Life tenant is entitled to income from the trust for duration of their life.
33
Discretionary Trust
* trustees have full discretion
* most flexible trust
* benefics can be added or removed
* High costs and aggressive tax regime and very complex.
34
PET
gift whereby one persons estate falls in value and anothers rises
35
is gifting into a discretionary a CLT or PET?
CLT
* the trust property is held at discretion of trustees who may change at any time
* so this is not deemed to sit on anyones estate so the gift is a CLT
*
36
Bare Trust Taxation
* IT&CGT;passed to benefics.
* IHT; gift is a PET so no IHT at time of gift
37
Discretionary Taxation IT
* IT; taxed at trustee rates
income is paid with a 45% tax credit - can be reclaimed
38
Discretionary Taxation CGT
* CGT; gains made within trust 24%
* CGT annual exemption of £1500
39
Discretionary Taxation IHT
* CLT's; if value of the gift exceeds NRB there will be IHT Charge
* 20% by trustees and 25% if paid by settlor
40
Discretionary Taxation
* who pays the IHT?
either trustess or settlor can pay
* more expensive for settlor to pay it 25%
* trustess pay 20%
41
periodic IHT charge on discretionary trust
* every 10 years value of trust against NRB
* excess subject to 6% IHT charge
42
If a client is self employed/owns their own business...
(tax help)
* restructure income to receive more dividend than salary (lower rates)
* pay salary to spouse (between 125-242 p.w qualifies for state benefits at 0% employee NIC)
43
effect of pension contribution to Income Tax
* first you minus net amount of total income and then gross the contribution up and that is a **tax band extender**
* helps client reduce adjusted net income to below (use net amount)
44
taxable benefit in kind on income tax calc
1. add to non savings income
2. Personal Allowance reducer
45
What effect does the below have on tax:
Income: £60,000
Gift Aid donation: £8,000 (net)
1. gross the gifted donation up (8k/0.8)
2. basic rate band increased by £10k
46
class 1 NICs minimum amount p.w
* Employer;No NIC due on £96 per week
* Employee; No NIC due on £241 p.w
47
In respect of taxation, the Ramsay principle is used to
ignore a series of transactions undertaken solely for tax avoidance, determining the transactions’
tax liability by the end result.
48
In respect of CGT, a current year loss can:
Current year losses can be carried forward but must be used BEFORE earlier years.
49
Matt makes a Chargeable Lifetime Transfer on 1st July 2025. When must any IHT due usually be paid?
The tax is usually due after 6 months, but where a transfer is made between 5th April and 1st October tax is due the following 30th April
50
What age must you open a Lifetime ISA up?
40 years old
51
A settlor has established two discretionary trusts. What is the maximum amount of income that each discretionary trust can receive and be exempt from income tax?
* Where the income arising in a discretionary trust is £500 or less, it will not be subject to income tax
* Where a settlor has a number of discretionary trusts, the £500 limit will be split amongst those trusts, but with a minimum level per trust of £100.
52
Split year treatment
* This treatment is available where a person leaves the UK for full-time work overseas or comes to the UK for full-time work
* **Leavers must cease to have a UK home **
53
asset bought before 1982 CGT date used
31st March 1982
54
Trustees of Interest in Possession trusts are subject to income tax at:
8.75% for dividend income and 20% for all other income
55
Jack will automatically be regarded as non-resident in the UK if he spends fewer than how many days in the country during the current tax year?
* It's fewer than 16 days.
* if more than 16 then sufficient ties test
56
what does K tax code mean
* personal allowance is a negative amount
* the last digit is omitted
57
Where a fund has less than 60% fixed interest, payments will be treated as xxx.
dividends
58
Within how long of submission must HMRC usually start an enquiry into a self assessment form?
12 months
59
difference in taxation between onshore and offshore bonds
offshore no tax paid within so taxed at 45% at maturity
onshore 20% tax already paid within the bond
60
Income tax relief is given at xx% on both EIS and VCTs?
30%
61
What investment offer CGT deferal relief?
EIS and SEIS
NOT VCT
62
income less than 500 in discretionary trust
no income tax is due
63
discretionary trust CGT
39.35% dividends
45% non dividend income
64
discretionary trust income paid out to the client carries a tax credit of ....
45%
tax can be reclaimed by everyone but additional rate
65
class 4 NICs are paid
paid on account on 31 January in the tax year of assessment and on 31 July following the tax year of assessment
66
in the event of a married couple dying at same time
general law assumes that the older life dies first whereas for IHT purposes it is assumed they died at the same time to avoid a double tax charge.
67
to be an automatic resident uk how many days?
183
68
VAT Calc
value of output tax minus input tax times 20%
69
When is CGT due on investments?
31st January follwing end of the tax year which gain occurs
70
VCT CGT defferal?
no
71
assignments between spouses chargeable event>?
no
72
self employed are taxed on what basis?
tax year regardless of date of their accoutning period
73
Gain from investment bonds are subject to?
Income Tax
74
Interest payments for certain qualifying loans
The deduction is limited to the higher of 25% of the
individual’s adjusted total income or £50,000
75
class 1a payments
19th July following tax year 22nd if made electronically
| P11D Form
76
class 1a penalties
| 3 penalties
possible for three
5% penalties to be levied, after 30 days, 6 months and
12 months.
77
BADR
2 years
CGT 14% up to £1m
20% rule in business
78
CGT payable by
31st jan following end of tax year
79
CGT exemption for paying
residential property
payment of account is due 60 days
80
IHT payable on death must be paid
by the legal personal representatives (LPR) within six months of
the end of the month of death.
81
Any IHT payable on a PET is payable by
the recipient
of the gift.
82
long term residence
UK resident for at least 10 out of the last 20
tax years
83
when does IHT Tail come into -play
when client loses LTR status
the LTR status will continue for a period of time
84
FIG Regime
* If an individual has been non-UK resident for a period of 10 tax years
* 100% relief from UK income tax and CGT for their first four tax years of UK residence
85
R03 Important
flashcards
Decks in class (1)
# Cards
