Section 1 Mocks

UK resident tax on French home

As she’s a UK resident she will be taxed on her foreign property with CGT

Can use CGT allowance

What is agricultural relief based on

Land, crops and buildings.

• Not on animals or equipment

It’s based on the agricultural value and not the open market value

Self employed profits of £5000, how much NIC will he pay

Doesn’t have to pay any as below Lower limit but could choose to pay class 2

Transferring assets with a loss to a spouse

Can’t use this loss for gains

It’s a no gain/no loss basis where everything is wiped but no CGT is due

How long until IHT lifetime transfers are due

6 months after the end of the month the transfer was made in

Certain rule:

• Transfers made after 5th April and before 1st October, the IHT is due on 30th April following year

If gift shares with big capital gain to a charity what is the tax

Capital gain is exempt from CGT and it will obtain tax relief on full market value

Net pay arrangement and relief at source

RAS:

• Pension contributions deducted from pay after tax is calculated

NPA:

• Pension contributions are deducted from pay before tax is calculated

• Relief auto given at highest rate

Someone hasn’t been a resident for 1 of last 3 years. She has 3 UK ties how many days does she need to be here to be classed as a uk resident

91 - 120 days

Think of extra time of football

Stamp duty for AIM

There isn’t SD for AIM

Only shares are

Difference between Stamp Duty and Stamp Duty Reserve Tax

SD:

• Paper based transactions

• Only for £1,000 or more

• Rounded to nearest £5

SDRT:

• For electronic (CREST)

• No minimum value

Both 0.5%

How can someone effectively earn a 60% relief on a pension contribution

Earns £120k

Imagine they make a £10k pension contribution

Her adjusted income becomes £110k:

• So she regains £5k of PA

• That £5k is no longer taxed at 40% saving £2k

• Also get £4k of HRT relief on her £10k contribution

That means from her £10k contribution she makes £6k of relief = £60%

So a £10k pension contribution only cost her £4k

Losses from a portfolio

• Can be offset against gains

• Must register losses within 4 yrs or its lost

• A gain must be fully offset before offsetting gains from different years

Income tax due

Pension income is £15,070

Receives unit trust income of £5,000

£15,070 - 12,570 = £2,500 taxable pen income

starting rate is £5,000 at 0% - taxable non savings income eats into that

• £5k - £2.5k = £2.5k SR remaining

So the first £2.5k is at 0% and he also has a PSA of £1k

• Total at 0% is £3.5k

Remaining is £1.5k at 20%

Marriage allowance

Can only go from Non-Tax payers to BRT’s

The marriage allowance is £1260 (nearly 10% of £12,570)

But you don’t just get £1260 you get a tax reduction at 20% of £1260

• £252

Trust tax credits

Discretionary trust - 45%

IIP trust - 20%

The trustees pay this amount and the beneficiaries can get this as a tax credit when taking distributions

For Bare trusts or he beneficiary pays the tax so it’s based off their own rate with no tax credit

Uncertified share

Uncertified = CREST

£1,000 minimum doesn’t apply

No stamp duty if transferred with no financial consideration

What is the SDRT on £5k investment trust shares, £2,500 OEIC, £600 private limited shares

OEIC = No stamp duty

Ltd shares = No stamp duty as below £1k

Inv Trust = £5k x 0.5% = £25

Deducting fees from income tax on savings interest and dividend income

Bank savings account

• Savings interest - Account fees can’t be deducted from his interest before taxable savings income is calculated

Equity OEIC

• Distributions which would be dividend income

• Fees also can’t be deducted from this for income tax purposes

Discretionary trust special allowance

Max of £500 of interest and dividends are not taxed

This is split evenly between all trustees each year

Tax order

Income tax always first

Then gains from investment bonds

The full tax order is:

• Non-savings (income)

• Savings (income)

• Dividends (income)

• Gains from investment bonds

Bond gains can be sliced based on number of years bond held

Pool car

When a car is pooled (number of employees can use it) is not a BIK

If it was an individual car used then it is a BIK

Gift Aid

Give £80 to charity HMRC give 20% as well

If you are a HRT it should be 40%

• HMRC add the 20% like before but the other 20% is used to reduce your income tax bill

So give £80, HMRC give £20 and your tax bill is reduced by £20 meaning you actually only spent £60

Savings income tax

First £5k of savings income isn’t taxed at all

However non savings income (like employment income) eats into that £5k

So if someone’s income is £13,570

• £12570 is tax-free = £1,000 taxable income

• That £1000 is taxed at 20% but it also reduces your £5k savings income

Company car tax

Rate of emissions per kilometre makes a % that is applied to price of car = annual taxable amount

• Same process for fuel

Personal contributions up to £5k can be taken off list price

REIT, AIM, EIS & VCT CGT charge

VCT - None

EIS - None after 3 years

REIT - Yes

AIM - If not under EIS then yes

Profit of £9k for self employed person. How much class 2 NIC do they pay

Nothing as it’s not mandatory

Could choose to pay class 2 but would only be needed if profits were less than the small profits threshold (£7105)

He will receive NIC credits for the year based on his profit level

He will also not be due class 4 as his profits don’t exceed profits threshold of £12,570

Criteria to qualify for business asset disposal relief

• Owned shares for 2 years prior to disposal

• Held at least 5% of issuer share capital

An ART paying £500 to charity will have to pay how much

£400

Gift aid declaration allows you to claim relief at Basic rate (20%)

£500 - 20% =£400.00

Stamp duty liable on what

Shares

• This includes REIT as these are listed shares

No SD on OEICS or EYFs as they are funds

Benefit in Kind

A Non cash benefit your employer gives you because of your job which HMRC treats as part of remuneration so tax it

Group Income Protection & group life assurance isn’t a BIK

ART paying REIT tax

PID income - £1,200

Non-PID income - £400

ART pay 25% on the PID instead of 20%

• £1,200 / 0.8 × 25% = £500

Non-PID can use £500 DA = £0

REITS can be placed in an ISA