Chartered Institute of Taxation (CIOT / CTA) Awareness: Cross-Tax Fundamentals Syllabus

State the UK income tax rates and bands for non-savings income (excluding Scotland), 2024/25.

Basic rate 20% on taxable income up to £37,700; higher rate 40% from £37,701 to £125,140; additional rate 45% above £125,140.

What are the dividend nil rate band and dividend tax rates for 2024/25?

Dividend allowance (nil rate) of £500; then dividends taxed at 8.75% (basic rate band), 33.75% (higher rate band) and 39.35% (additional rate band).

What is the savings nil rate band (personal savings allowance) and who gets it?

£1,000 of savings income taxed at 0% for a basic rate taxpayer, £500 for a higher rate taxpayer, and £0 (nil) for an additional rate taxpayer.

What is the starting rate band for savings income?

Up to £5,000 of savings income may be taxed at 0%, but this band is reduced by non-savings (e.g. employment) income above the personal allowance, so it is only available to those with low non-savings income.

How is the cash equivalent of a company car benefit calculated?

$\text{Benefit} = \text{List price} \times \text{CO}_2\text{ percentage}$, where the percentage is set by the car's CO2 emissions (with adjustments for fuel type and electric range), time-apportioned and reduced for employee capital contributions.

How is the taxable benefit on a beneficial (cheap or interest-free) loan from an employer calculated?

Using the average or precise method: $\text{Benefit} = \text{Loan} \times \text{official rate} - \text{interest actually paid}$. No benefit arises if all such loans total £10,000 or less throughout the year.

What is the general basis for taxing employment earnings (the receipts basis)?

Earnings are taxed on the receipts basis — the earlier of when payment is made or when the employee becomes entitled to it (directors have additional trigger dates). Benefits in kind are generally taxed on the cash equivalent in the tax year provided.

Name three common tax-exempt employment benefits.

Employer pension contributions, the first £30,000 of a genuine termination/redundancy payment, mileage allowance up to approved rates, workplace parking, one mobile phone, and trivial benefits costing £50 or less.

What is the badges of trade test used for?

To determine whether a transaction amounts to trading (taxable as trading income) rather than an investment or capital transaction. Factors include profit motive, frequency of transactions, nature of the asset, length of ownership, modifications to the asset, and method of acquisition/finance.

How is property income generally taxed for individuals, and on what basis?

Rental income from a UK property business is taxed as property income, generally on the accruals basis (cash basis is the default below £150,000 receipts), pooling all properties together with allowable expenses; finance costs on residential lets get only a 20% basic-rate tax reducer.

What is the 'cash basis' for small businesses?

An optional simplified basis where trading/property profits are computed on money received less money paid, rather than the accruals basis. Available to small businesses below the entry threshold; it restricts the use of certain reliefs (e.g. loss relief against other income).

What is the Enterprise Investment Scheme (EIS) income tax relief?

Income tax relief at 30% on investments of up to £1m (or £2m if at least £1m is in knowledge-intensive companies) per year in qualifying unquoted trading company shares, given as a tax reducer, provided shares are held for at least 3 years; gains on disposal are also exempt from CGT.

What income tax relief does the Seed Enterprise Investment Scheme (SEIS) give?

Income tax relief at 50% on investments of up to £200,000 per year in qualifying very small/early-stage trading companies, with shares held for at least 3 years and an associated CGT reinvestment relief.

What is the Individual Savings Account (ISA) annual subscription limit and its tax treatment?

Up to £20,000 per tax year can be invested; income (interest and dividends) and capital gains arising within an ISA are entirely tax-free and do not need to be reported.

Give the basic capital gains tax computation for a single asset.

$\text{Gain} = \text{Proceeds} - \text{costs of disposal} - \text{allowable cost (base cost + enhancement + acquisition costs)}$. Sum chargeable gains, deduct allowable losses and the annual exempt amount, then apply the CGT rate.

What is the CGT annual exempt amount for individuals in 2024/25?

£3,000 (reduced from £6,000 in 2023/24). Gains within this amount each tax year are exempt; it cannot be carried forward if unused.

State the main CGT rates for individuals in 2024/25.

For most assets: 10% within the basic rate band and 20% above it. For residential property (not the main residence): 18% (basic rate band) and 24% (higher rate). Business Asset Disposal Relief gains are taxed at 10%.

What is Business Asset Disposal Relief (BADR) and its lifetime limit?

It charges qualifying gains on the disposal of all or part of a trading business (or qualifying company shares held by an officer/employee with a 5% interest) at a reduced 10% rate, subject to a £1m lifetime limit per individual.

How does the CGT 'matching' rule work for shares of the same class in the same company?

Disposals are matched in order: 1) shares acquired on the same day; 2) shares acquired in the following 30 days (the 'bed and breakfasting' rule); 3) the Section 104 pool (all other shares held, at average cost).

What is the basis of charge for Inheritance Tax on death?

IHT is charged on the value of the deceased's estate at the date of death (the death estate), at 40% on the value exceeding the available nil rate band, after exemptions and reliefs.

What is the IHT nil rate band (NRB) and residence nil rate band (RNRB) for 2024/25?

The standard NRB is £325,000; the RNRB is up to £175,000, available where a main residence passes to direct descendants. The RNRB is tapered away by £1 for every £2 of estate value above £2m.

Distinguish between a Potentially Exempt Transfer (PET) and a Chargeable Lifetime Transfer (CLT) for IHT.

A PET is a lifetime gift to an individual — exempt if the donor survives 7 years, otherwise chargeable on death. A CLT is a lifetime transfer into most trusts — immediately chargeable to IHT at the lifetime rate of 20% (on amounts above the NRB), with a further charge if death occurs within 7 years.

How does taper relief reduce IHT on a death within 7 years of a lifetime gift?

It reduces the tax (not the transfer value) where death occurs more than 3 years after the gift: 20% reduction (3–4 yrs), 40% (4–5 yrs), 60% (5–6 yrs), 80% (6–7 yrs). No taper applies if death is within 3 years.

Name three key IHT exemptions for lifetime transfers.

Annual exemption (£3,000 per year, one year's unused amount carried forward), small gifts exemption (£250 per recipient per year), normal expenditure out of income, and gifts on marriage (£5,000 from a parent, £2,500 grandparent, £1,000 other).

What is the inter-spouse exemption for IHT and CGT?

For IHT, transfers between UK-domiciled spouses/civil partners are wholly exempt (during life and on death). For CGT, transfers between spouses/civil partners living together are on a no gain/no loss basis, so no CGT arises and the transferee inherits the base cost.

What is Business Property Relief (BPR) for IHT and the rates of relief?

It reduces the value of relevant business property for IHT: 100% relief for an unincorporated business or unquoted shares, and 50% for quoted controlling shareholdings or certain assets used in the business, generally requiring 2 years' ownership.

How can CGT and IHT both apply to the same asset, and what mitigates the overlap on death?

A lifetime gift can trigger CGT (on the donor's gain) and later IHT if the donor dies within 7 years. On death, however, there is no CGT — assets receive a CGT-free uplift to probate (market) value — so the heir's base cost is reset, even though IHT may be charged on the death estate.

What is gift holdover relief and why is it relevant to the CGT/IHT interaction?

For gifts of qualifying business assets (or transfers immediately chargeable to IHT), the donor's CGT gain can be held over so the donee takes the asset at the donor's base cost. It prevents a dry CGT charge on a gift that may also fall within the IHT regime.

What is the corporation tax financial year and the main rate of corporation tax for FY2024?

The financial year runs 1 April to 31 March. For FY2024 the main rate is 25% (profits over £250,000), the small profits rate is 19% (profits up to £50,000), with marginal relief between £50,000 and £250,000.

When is corporation tax due for a company that is not 'large'?

9 months and 1 day after the end of the chargeable accounting period. Large companies pay by quarterly instalments based on their estimated liability.

What is the VAT registration threshold and the standard rate of VAT?

Compulsory registration is required when taxable turnover exceeds £90,000 in the previous 12 months (or is expected to in the next 30 days). The standard VAT rate is 20%, with a reduced rate of 5% and a zero rate for certain supplies.

Distinguish zero-rated, exempt and standard-rated supplies for VAT.

Zero-rated (0%) are taxable supplies allowing input VAT recovery (e.g. most food, children's clothes); exempt supplies (e.g. insurance, finance, some property) carry no output VAT and block input VAT recovery; standard-rated supplies bear 20% and allow input recovery.

What are the main classes of National Insurance Contributions and who pays them?

Class 1 (primary, paid by employees; secondary, paid by employers on earnings), Class 1A (employers on benefits in kind), Class 2 (flat-rate self-employed, being phased out), Class 3 (voluntary), and Class 4 (self-employed on trading profits).

How is Class 4 NIC charged on self-employed profits for 2024/25?

At the main rate (6% in 2024/25) on profits between the lower profits limit (£12,570) and upper profits limit (£50,270), and at 2% on profits above the upper profits limit.

Give an overview of the main UK stamp taxes and what they apply to.

Stamp Duty Land Tax (SDLT) on land and buildings in England/N.Ireland (LBTT in Scotland, LTT in Wales); Stamp Duty / Stamp Duty Reserve Tax (SDRT) at 0.5% on transfers of shares — SDRT on electronic/paperless transfers and stamp duty on stock transfer forms.