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The filing date is the due date, so if the due date for an Income Tax return is 31 January 2025, then HMRC has until 31 January 2026 to open up a compliance check as long as the return was filed on time. If the return was filed late, then HMRC has a bit longer to open up a compliance check.
According to the information given, £6,700 is not the correct answer; the correct answer is £8,270 as explained above.
The residence. It doesn’t have to be the main residence, just a residence that the deceased lived in at some point.
Because the £83,000 in June 2023 is the GROSS CHARGEABLE TRANSFER which means that AEs have already been deducted and the lifetime tax calculated and added in if the donor had paid it.
So the NRB at death is £(325,000 – 83,000) = £242,000.
The IHT on the death estate is £(495,000 – 242,000) x 40% = £101,200.
If you are given the GROSS CHARGEABLE TRANSFER do not do anything else to that figure other than reduce the NRB for later transfers within 7 years.
No, it has to have been lived in by the owner at some point during the ownership period.
You haven’t done anything wrong; according to the information that you have provided, his PA would be, as you have calculated, £8,270.
Is there anything else in the question that you may have missed? Property income/savings income/dividends?
For the PA to be £6,700, his ANI would have to be £111,740, which means that his income (before the deduction of the gross gift aid) would have to be £112,540. (£12,570 – 50% x (112,540 – 800 – 100,000) = £6,700.
The question states that she owns two properties, but it does not state that either of them were her main residence (they could both be rental properties). On the assumption that neither of her properties were he main residence, then the RNRB would not apply as that is one of the conditions. I must admit that the question is a bit vague on the point though!
A1: Yes, as Class 1 NIC (primary and secondary) are calculated for an ‘earnings period’ (ie either weekly or monthly depending on how often the employee gets paid), then if Emerald has only been employed for 3 months, then you would only calculate the NIC for 3 months.
A2: Yes (as above). Although the limits for Class 4 NIC in relation to the self-employment would not be time-apportioned.
A3: As Class 1A is calculated on benefits, the benefits will already have been apportioned for the shorter period and so it not make sense to apportion them again when calculating the Class 1A NIC.
There’s no shortcut; you just have to learn them (preferably via question practice)
Items on death are transferred at ‘probate value’ which is essentially market value at the date of death.
A1: if home is your permanent place of work, then travel from home to your employer’s office is business miles and can be claimed for.
A2: if the journey to the client’s premises is essentially the same as your normal commute, then it is not classed as business miles and cannot be claimed for.
No. 3% pa means 3% for a 12 month period, so each month gets 1/12 of 3%. So if it’s in use for 5 months, it doesn’t matter how long the period is, the SBAs will be 5/12 x 3%.
Yes, if the question includes the amount of the taxable benefits, then you would include the amount of Class 1A in the total amount of Class 1 NIC due. Bear in mind that it would be a separate calculation (i.e. not added to the salary) as employees pay Class 1 Primary, and employees pay Class 1 Secondary on cash remuneration, but only employers pay Class 1A.
I agree it seems a little confusing! Income arising in an ISA is exempt from income tax. You can also take out an ISA with NS&I (National Savings and Investments) in which case it enjoys the same exemption as any other ISA. Most ‘normal’ NS&I income is taxable (with some exceptions such as income from National Savings Certificates). I hope that helps to clear things up.
£(80,000 – 12,570) = taxable income of £67,430.
The basic rate band is extended by the gross personal pension contribution, so £(37,700 + 50,000) = £87,700, which means that all of her income is taxed at basic rate, so £67,430 x 20% = £13,486.
The annual allowance charge means that the excess of total pension contributions over the annual allowance results in additional tax being levied on the individual, so if the AA charge is £10,000, as this falls within the extended basic rate band (£87,700 – £67,430 = £20,270) an additional amount of £10,000 x 20% = £2,000 is added to the tax liability of £13,486, giving a total Income Tax liability of £15,486.
Incidentally, the annual allowance in 2024/25 was £60,000. It hasn’t been £40,000 since 2022/23, so with gross personal pension contributions of £50,000 as in your example (and there will be no employer’s contributions to increase this amount as she’s self employed), the example is wrong in this respect as £50,000 < £60,000 and therefore there would be no AA charge.
Plant and machinery are always wasting assets (they tend to fall in value) and if they are moveable, they are chattels. If they are sold for less than the price originally paid for them, relief for the fall in value will have been given through the capital allowances computation, so any loss is not allowable for CGT (as this would mean that loss relief would be given twice). However, if they are sold for more than the price originally paid for them, the gain is chargeable but subject to the £6,000 rule; i.e. if both proceeds and cost are greater than £6,000, the gain is chargeable as normal, but if proceeds are more than £6,000 and cost was less than £6,000, then the 5/3 rule applies to restrict the gain.
Plant and machinery are always wasting assets (they tend to fall in value) and if they are moveable, they are chattels. If they are sold for less than the price originally paid for them, relief for the fall in value will have been given through the capital allowances computation, so any loss is not allowable for CGT (as this would mean that loss relief would be given twice). However, if they are sold for more than the price originally paid for them, the gain is chargeable but subject to the £6,000 rule; i.e. if both proceeds and cost are greater than £6,000, the gain is chargeable as normal, but if proceeds are more than £6,000 and cost was less than £6,000, then the 5/3 rule applies to restrict the gain.
Yes, that’s correct. The term ‘PET’ refers the the amount after the deduction of any exemptions. There is no lifetime tax to pay as a PET only becomes chargeable if the donor dies within 7 years.
The gift to the trust is made in January 2023 (2022/23) and annual exemptions must be applied chronologically to the first gift in the tax year, so they would have been used up by the PET in September 2022.
The notes and lectures are based on the Finance Act 2023, whereas the December 2025 exam will be based on the Finance Act 2024 and there have been some changes. For example, the dividend nil rate band is now £500, the cash basis is now the default method for calculating the trading profits of unincorporated businesses rather than the accruals basis and the annual exempt amount for capital gains is now £3,000.
The majority of the content hasn’t changed, but if you are going to use the notes and lectures, then proceed with caution!
Income Tax
Dividend nil rate band has been reduced from £1,000 to £500 (savings income nil rate bands unchanged)
Child benefit tax charge is now 1% for each £200 of income between £60,000 and £80,000.National Insurance Contributions
Class 1 primary: main rate reduced to 8% between £12,570 and £50,270, 2% above this
Class 1 secondary: remains at 13.8% above £9,100
Class 1A: remains at 13.8%
Class 2: Generally, no longer payable. Voluntary class 2 contributions can be paid by those with profits below the small profits threshold to maintain their NIC contributions record.
Class 4: main rate reduced to 6% between £12,570 and £50,270, 2% above thisEmployment income
Official rate of interest remains at 2.25%
Car benefit percentages unchanged, fixed amount to apply percentage to for car fuel remains at £27,800
Van benefit remains at £3,960, and £757 for fuelBusiness Income Tax
The cash basis is now the default method for calculating trading profits of an unincorporated businessCapital Gains Tax
Annual exempt amount reduced from £6,000 to £3,000
Higher rate of tax for residential property disposals reduced from 28% to 24%.VAT
The VAT registration threshold has increased to £90,000
The VAT deregistration threshold has increased to £88,000
