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55 Cards in this Set
- Front
- Back
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How to calculate adjusted net income for personal allowance restriction? |
Net income less personal pension contributions |
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What is amount of pension eligible for tax relief? What is relevant earnings? |
Higher of… Relevant Earnings £3,600 RE - employment income, trade income, furnished holiday let |
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What is threshold income for pension? |
Net income - gross personal pension contributions |
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What is adjusted income for pensions? |
Net income + workplace pension contributions |
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What tax relief does EIS provide for IT, and CGT What shares must they be and how long held for? |
IT - tax reducer on subscriptions up to £1,000,000 30% of amount subscribed Must be new shares in unquoted unconnected company and held for 3 years CGT - Gains exempt, deferral relief available |
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What tax relief does SEIS provide for IT, and CGT What shares must they be and how long held for? |
IT - tax reducer on subscriptions up to £100,000 50% of amount subscribed Must be new shares in unquoted unconnected company and held for 3 years CGT - Gains exempt, exemption relief available |
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What tax relief does VCT provide for IT, and CGT What shares must they be and how long held for? |
IT - tax reducer on subscriptions up to £200,000 30% of amount subscribed Must be new shares in unquoted unconnected company and held for 5 years CGT - Gains exempt, losses not allowable, dividends tax free |
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How is deemed salary calculated for small organisations? IR35 |
Taxed on deemed salary instead of dividends received. Income from engagement Less 5% deduction Less salary paid Less ER NIC on actual payments Less expenses allowable Gross amount Less ER NIC on gross (x 13.8/113.8) Actual deemed payment to worker |
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Save as you earn - Who qualifies, what is it and what’s the tax advantage |
Must be open to all employees. May have minimum employment to qualify Employees save monthly amounts in a savings account for 3 or 5 years and a tax free bonus is added via interest At withdrawal money can be taken as cash or used to buy ordinary shares at discount |
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Company share option plan - who qualifies, what is it, what’s tax advantage |
Open only to select employees who are offered share options max £30,000. Options are not provided at discount. There is no IT on grant or exercise between 3 and 10 years after the Grant CGT on sale of shares |
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Enterprise management incentives - who qualifies, what is it, and what’s the tax advantage |
The companies gross assets must not exceed £30m and have less than 250 employees Employees must be key and must not hold more than £250k value of shares (£3m in total) No IT on Grant and exercise unless provided discount, below tax charge At exercise income tax charge based on lower of the discount on grant and difference between market value at exercise and option price paid Cost of shares in CGT = Amount paid plus discount taxed as earnings above |
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Share incentive plan - who qualifies, what is it, and tax advantage |
All employees eligible An employer can give free shares up to £3,600 pa Over 5 years no IT/NIC 3-5 years IT/NIC on lower value at award or withdrawal Under 3 years IT/NIC on value at withdrawal |
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Furnished holiday lets what conditions and advantages? 3 and 4 |
a) UK and available 210 days + b) Let for 105 days + c) Lettings that exceed 31 days must not exceed 155 days Advantages Qualifies relevant earnings for pension No restrictions on finance costs Capital costs deductible Rollover relief, gift holdover and BADR available |
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Payment dates for CGT |
31st Jan following end of tax year 60 days for residential property |
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What is investors relief? |
New shares in an unlisted company, issued after 17th march 2016 and held for 3 years Not employee of company |
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Resident and domiciled effect on liability to tax |
UK IT on worldwide income If overseas income less than £2000, remittance basis used |
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Resident and not domiciled effect on liability to tax |
Pay UK tax on UK income and overseas income only if remitted to UK If unremitted less than £2000 remittance basis, keep personal allowance, AEA, no RBC If over £2000 use arising basis unless elect to use RB If using arising keep all allowances and avoid RBC If elect to use remittance basis lose allowances pay RBC (See tax tables) |
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Replacement of business assets relief |
Delay CGT liability so proceeds from sale are reinvested in new assets by deducting gain from cost of new asset Assets used in trade Land and building, fixed machinery and plant, goodwill Purchase up to 12 months before and 36 months after disposal If new asset is depreciating gain is not deducted, deferred until Disposal of new asset, ceases, or 10 years |
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What is incorporation relief? |
Disposal of assets by an unincorporated business to a company, can carry loss if 80% consists of shares Deduct from base cost All following required… All assets transferred to company Going concern Consideration wholly or partly in shares |
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What are automatic overseas tests? |
In UK less than 16 days if resident for 1 or more of previous 3 tax years In UK less than 46 days if not a resident for 1 or more of previous 3 tax years Works full time overseas if in UK less than 90 days |
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What are automatic UK tests? |
In UK 183 days or more Only home in UK and occupy for at least 30 days Full time work in UK |
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What are sufficient ties tests? |
Having close family (Spouse or minor child) in the UK House in UK available at least 91 days and is made use of Work 40 days in UK (Substantive) Being in UK more than 90 days during either of two previous tax years If resident in prior 3 tax years; spend more time in UK than any other country |
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When is someone deemed domiciled? |
Born in UK so domicile origin (Former resident) Been UK resident for at least 15 of 20 tax years preceding relevant tax year |
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Non residence effect on liability to tax |
UK tax only on UK income No personal allowance Gain not taxable unless UK land |
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CGT who are temporarily non-UK resident for less than 5 years tax treatment |
Remain subject to CGT for assets acquired before leaving UK, if resident 4 of 7 previous tax years |
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What is business property relief and what is tax advantage? |
Business property is transferred, this can be deducted before exemptions. Minimum owned two years and done has to still have assets at death Sole proprietor business or partnership share 100% Shares and securities in unquoted trading company 100% Shares and securities in quoted trading company 50% Land, Building, Plant, Machinery owned by donor 50% |
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What is agricultural property relief? IHT |
100% relief for agricultural property transferred Owned for 2 years if donor farms the land Owned for 7 years if property farmed by someone else |
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How does reduced IHT work with charity donations? |
Estate taxed at 36% if at least 10% net estate left to charity 10% is based on chargeable estate deduct nil rate band |
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IHT small gift exemption |
£250 per donee per tax year, if over whole amount taxable |
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IHT marriage exemptions |
£5000 parent £2500 grandparent £1000 any other person |
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IHT tax treatment if UK asset and rest of estate is exempt |
Chargeable amount x 40/60 |
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IHT When is someone deemed domiciled? |
UK resident at least 15 of the 20 years preceding tax year And UK resident at least 1 of the 4 tax years ending with relevant tax year |
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How is a gift with reservation treated on death? IHT |
Asset is deemed to be included in death estate at its value at death. Alternatively it will be treated as a lifetime transfer HMRC will use the method with highest tax liability |
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What happens with a gift with reservation of benefit if reservation released? |
Gift taxed on basis it being a PET at time the reservation ceased, AEA not available on this. |
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When are Lifetime IHT and Death IHT due? |
Lifetime - If between April and September IHT due 30th April otherwise 6 months from end of transfer Death - 6 months from end month of death |
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How do IHT instalments work? |
Paid in ten equal annual instalments for land, all shares where donor had control, unquoted shares if over £20,000 and 10% of shareholding, business or interest in business |
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What is trade loss relief for sole traders? What’s the cap? First year and terminal? |
Current year and/or prior year general income. Remaining can offset capital gains. Cap on maximum loss relief against general income higher of £50,000 and 25% x (Total income - gross personal pension contributions). If started trading first four tax years, carry back 3 tax years on FIFO basis If ceasing terminal loss carry back against trading profits 3 years LIFO |
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What is reinvestment relief for intangibles companies |
Gain can be deducted from cost of new intangible asset 12 months before and 3 years after disposal of original asset |
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What is reinvestment relief for intangibles companies |
Gain can be deducted from cost of new intangible asset 12 months before and 3 years after disposal of original asset |
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What is qualifying R&D and what is tax treatment?Companies SMEs |
Expenditure on staff costs, consumables, software, fuel, power and water qualify for 186% deduction 65% of 86% for subcontractors 100% FYA can be claimed on capital expenditure |
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What is substantial shareholdings exemption? |
If investing company: Holds at least 10% share capital Entitled to 10% of profits Entitled to 10% of assets Held continuously for 12 months in 6 years prior Any gain is exempt and loss is not allowable |
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What loss relief is available for companies? And loss in final 12 months of trading? |
Current period and carry back against total profits or carry forward against total profits Final trading - carry back 3 years LIFO Restriction of £5m and can only reduced by 50% |
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What is a consortium? What is consortium relief? |
Two or more companies own at least 75% Cannot own more than 75% each Losses can flow between consortium companies and its members, relief ownership % x consortium company result |
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What is degrouping charge? When does it apply? |
Gain or loss avoided by no gain intercompany. Shares in company sold resulting in leaving 75% group within 6 years of transfer. Add to proceeds of share sales |
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Repurchase of own shares from shareholder - tax implication on company? |
Capital disposal, gain or loss based on repurchase price |
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Repurchase of own shares from shareholder - tax implication on shareholder if distribution? |
Proceeds Less original price when shares issued = Amount taxed as dividend |
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Repurchase of own shares from shareholder - shareholder Capital treatment, what are the requirements? |
Unquoted trading company Repurchase benefits the trade UK resident Held for 5 years or 3 years inherited Vendor reduces holding by at least 25% Holding less than 30% of total |
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Close company - loan repayment treatment? What are exceptions? |
Penalty tax is repayable If written off company receive repayment of penalty tax and shareholder deemed to have received a dividend Exceptions… Loan less than £15k Made to director or employee Borrower does not own more than 5% |
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Close company benefit to shareholder treatment? |
Benefit to shareholder or associates not caught under employment, treated as distribution, disallowed from corp tax and treated as dividend |
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Transfer pricing what is it, and what is the impact? |
UK taxable profit computed as if transaction at arms length, increase TTP to compensate losss in corporation tax. SMEs exempt unless party resident in country without double tax treaty (Using 3rd party to make sales in countries with lower taxes) |
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What is a CFC? |
Company which is resident outside UK and controlled by resident in UK |
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What is CFC charge? |
Profits are apportioned to UK resident companies entitled to at least 25% of profits Charged profit x 25% corp tax |
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VAT what is annual accounting scheme? |
Turnover below £1.35m One annual return two months after YE Payment of 90% of prior years VAT liability due in 9 equal instalments |
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What is transfer of a going concern VAT? |
When business sold as a going concern deemed outside of scope. All following must apply… Must be VAT registered purchaser Same kind of business, as going concern No significant break in trading |
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What is capital goods scheme? What does it apply to? |
Applies to… Computers, boats, aircraft over £50,000 5 years Land & Building over £250,000 10 years VAT recovery adjustment made if change in taxable use with following formula for partially exempt businesses (Original VAT/10 or 5) x (taxable % use now - original taxable %) |
