CTA flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Personal allowance taper

Adjusted net income above £100,000 reduces the personal allowance by £1 for every £2 of excess, removing it entirely once income reaches £125,140.

Dividend nil rate band

The first £500 of dividend income in 2024/25 is taxed at 0%, although it still counts towards the basic or higher rate band.

Personal savings allowance

Basic rate taxpayers receive £1,000 of savings interest taxed at 0%, higher rate taxpayers £500, and additional rate taxpayers receive nothing.

Class 1 primary NICs

Employees pay 8% on earnings between £12,570 and £50,270, then 2% on all earnings above the upper earnings limit.

Marriage allowance transfer

A spouse or civil partner may transfer £1,260 of personal allowance, giving the recipient a tax reducer worth up to £252 each year.

Marginal relief

Companies with augmented profits between £50,000 and £250,000 pay corporation tax at 25% less marginal relief, an effective rate of 26.5%.

Annual investment allowance

Gives 100% relief on most plant and machinery up to £1 million in a 12-month period, shared across related companies.

Full expensing

Companies can claim a 100% first-year allowance on new main-rate plant and machinery, and 50% on special rate assets, with no cap.

Terminal loss relief

A trading loss made in the final 12 months of trading can be carried back against trading profits of the previous three years, latest first.

Loans to participators

A close company pays a 33.75% charge on loans to participators outstanding nine months after the period end, refundable when the loan is repaid.

Annual exempt amount

The capital gains tax exemption is £3,000 for individuals and personal representatives in 2024/25, while most trusts receive £1,500.

Business Asset Disposal Relief

Qualifying gains are taxed at 10% up to a £1 million lifetime limit on disposals of a business or shares meeting the relevant conditions.

Residence nil rate band

An extra £175,000 inheritance tax band applies to a main residence passing to direct descendants, tapered by £1 for every £2 above £2 million.

Potentially exempt transfer

A lifetime gift to an individual is exempt if the donor survives seven years; otherwise it fails and uses the nil rate band at death.

Relevant property trust charge

Discretionary trusts face a periodic charge of up to 6% of value above the nil rate band every ten years, with exit charges between.

VAT registration threshold

A business must register once taxable turnover in any rolling 12 months exceeds £90,000, or is expected to exceed it within 30 days.

Place of supply of services

Business-to-business services are generally supplied where the customer belongs, shifting VAT accounting to the customer through the reverse charge.

Partial exemption de minimis

Exempt input tax is recoverable where it is no more than £625 per month on average and below 50% of total input tax.

VAT tax point

VAT becomes chargeable at the earlier of the invoice date and the date payment is received, unless the supply is completed sooner.

Flat rate scheme

Small businesses with turnover under £150,000 may pay VAT as a fixed percentage of gross turnover, leaving the scheme at £230,000.

Statutory residence test

Days spent in the UK, available ties and automatic tests determine residence; 183 days in the UK makes an individual resident automatically.

Permanent establishment

A fixed place of business or dependent agent through which a company trades in another country, creating a taxable presence there.

Double taxation relief

UK residents credit foreign tax paid against UK tax on the same income, limited to the UK tax attributable to that income.

Arm's length principle

Transactions between connected parties must be priced as if the parties were independent, with adjustments made under transfer pricing rules.

Payments on account

Two instalments, each 50% of the previous year's net liability, fall due on 31 January and 31 July where the liability exceeds £1,000.

Self-assessment filing deadline

A return must be filed online by 31 January following the end of the tax year, or by 31 October if filed on paper.

Discovery assessment window

HMRC may raise a discovery assessment within four years of the tax year, extended to six for carelessness and twenty for deliberate behaviour.

Late filing penalty

A fixed £100 penalty applies on the filing date, followed by daily penalties of £10 after three months and percentage penalties later.

PCRT fundamental principles

Integrity, objectivity, professional competence and due care, confidentiality and professional behaviour are the five standards required of CIOT members.

General anti-abuse rule

The GAAR counters abusive arrangements that cannot reasonably be regarded as a reasonable course of action, judged by a double reasonableness test.

Suspicious activity report

A report to the National Crime Agency by a supervised business with knowledge or suspicion of money laundering, allowing otherwise prohibited activity to proceed.

DOTAS disclosure

Promoters must notify HMRC of notifiable avoidance schemes and give clients a scheme reference number to quote on their tax returns.