Chartered Institute of Taxation (CIOT / CTA) Taxation of Individuals Advisory Syllabus

Taxation of Individuals Advisory syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Taxation of Individuals Advisory in Chartered Institute of Taxation (CIOT / CTA), not a summary of it.

1. 1

   Residence, Domicile and Cross-Border Issues

   4 topics

   • Statutory residence test
     • Automatic overseas and UK tests
     • Sufficient ties test and split-year treatment
   • Domicile and deemed domicile
     • Domicile of origin, choice and dependence
     • Foreign income and gains regime reforms
   • Double taxation relief and treaties
     • Treaty residence tie-breaker
     • Credit versus exemption relief
   • Temporary non-residence anti-avoidance
2. 2

   Investment Income and Personal Reliefs

   4 topics

   • Savings, dividends and joint income
     • Allowances, ISAs and tax-free wrappers
     • Accrued income scheme
   • Property investment taxation
     • Furnished holiday lettings and the rent-a-room scheme
     • Finance cost restriction and incorporation considerations
   • Tax-advantaged investments
     • EIS, SEIS and VCT reliefs
     • Social investment tax relief
   • Chargeable event gains on life policies
3. 3

   Pensions and Wealth Planning

   4 topics

   • Registered pension scheme taxation
     • Annual allowance, tapering and carry forward
     • Lump sum allowances and benefit crystallisation
   • Capital gains planning for individuals
     • Use of losses and the annual exempt amount
     • Main residence relief and lettings
   • Lifetime gifting and family wealth transfer
   • Interaction of income, capital and pension strategies
4. 4

   Employment, Share Schemes and Mobility

   4 topics

   • Tax-advantaged share schemes
     • EMI, CSOP and SAYE
     • Share incentive plans
   • Unapproved share awards and securities
     • Restricted securities and elections
     • Employment-related securities reporting
   • Globally mobile employees
     • Overseas workday relief
     • Modified PAYE and detached duty relief
   • Termination packages and post-employment notice pay

Taxation of Individuals Advisory flashcards for Chartered Institute of Taxation (CIOT / CTA)

20 of 52 cards from the Taxation of Individuals Advisory deck — real questions with worked answers.

1. Under the UK Statutory Residence Test (SRT), what are the three automatic overseas tests that make an individual non-UK resident?

   An individual is automatically non-resident if: (1) they were UK resident in one or more of the previous 3 tax years and spend fewer than 16 days in the UK; (2) they were not UK resident in any of the previous 3 tax years and spend fewer than 46 days in the UK; or (3) they work full-time overseas (averaging $\geq 35$ hours/week) with fewer than 91 UK days and fewer than 31 UK workdays (>3 hours).

2. What are the three automatic UK residence tests under the SRT?

   An individual is automatically UK resident if: (1) they spend $\geq 183$ days in the UK in the tax year; (2) they have a UK home for $\geq 91$ consecutive days (present there on $\geq 30$ days) with no/insufficiently-used overseas home; or (3) they work full-time in the UK over a 365-day period.

3. List the five 'ties' used in the SRT sufficient ties test.

   Family tie (spouse/civil partner/minor child UK resident), Accommodation tie (available UK accommodation used during the year), Work tie (40+ days of >3 hours UK work), 90-day tie (90+ days in the UK in either of the previous 2 years), and Country tie (UK is the country in which most days are spent — only relevant for 'leavers').

4. In the SRT, how does the number of ties needed to be UK resident differ between 'arrivers' and 'leavers'?

   A 'leaver' (UK resident in any of the previous 3 tax years) can use all 5 ties and needs fewer ties for a given day count. An 'arriver' (not resident in any of the previous 3 years) cannot count the country tie (only 4 ties available) and generally needs more days/ties to become resident.

5. For SRT day-counting, when is a day counted as a UK day, and what is the 'deeming rule'?

   A day counts if the individual is present in the UK at the end of the day (midnight). Under the deeming rule, days where the person is present but not at midnight can still count if they have at least 3 UK ties and were UK resident in one of the prior 3 years and have more than 30 'qualifying' (non-midnight) days.

6. What is split-year treatment under the SRT?

   Although residence is normally determined for a whole tax year, split-year treatment divides the year into a UK part and an overseas part for someone arriving or leaving, so foreign income/gains in the overseas part are not UK-taxed. It applies only if the individual is UK resident for the year and meets one of 8 specified cases (e.g. starting/ceasing full-time work abroad, accompanying a partner).

7. Distinguish the three types of domicile under UK general law.

   Domicile of origin: acquired at birth, normally the father's domicile. Domicile of dependence: a dependent (child under 16/married woman pre-1974) takes the domicile of the person they depend on. Domicile of choice: acquired by an adult who settles in a new country with the intention of permanent/indefinite residence. The domicile of origin revives if a domicile of choice is abandoned without acquiring a new one.

8. What are the conditions for being 'deemed domiciled' in the UK (pre-April 2025 rules)?

   An individual is deemed UK domiciled if: (1) the 'long residence' test — UK resident for at least 15 of the previous 20 tax years (the '15/20' rule); or (2) the 'formerly domiciled resident' test — born in the UK with a UK domicile of origin, who has acquired a domicile of choice abroad, but is now UK resident.

9. What were the Remittance Basis Charge (RBC) amounts for long-term UK residents claiming the remittance basis (pre-April 2025)?

   $\pounds 30{,}000$ for an individual UK resident in at least 7 of the previous 9 tax years, and $\pounds 60{,}000$ for one UK resident in at least 12 of the previous 14 tax years. The charge is paid in addition to tax on remitted income/gains.

10. What allowances are lost when an individual claims the remittance basis (and pays/needs the RBC)?

    The individual loses entitlement to the income tax personal allowance and the CGT annual exempt amount for that year (unless unremitted foreign income/gains are under $\pounds 2{,}000$, when the remittance basis applies automatically without loss of allowances or an RBC).

11. What are the two principal methods of giving double taxation relief, and which does the UK favour?

    Exemption method (foreign income exempted from domestic tax) and Credit method (foreign tax credited against domestic tax on the same income). The UK primarily uses the credit method — relieving the lower of the UK tax and the foreign tax suffered on each source. Where no treaty applies, unilateral relief gives the same credit.

12. How is double tax relief by credit calculated for an individual with multiple foreign income sources?

    Relief is the lower of the foreign tax paid and the UK tax attributable to that source, computed source by source (not pooled). The UK tax on a source is found by comparing the tax liability with and without that source, allocating the personal allowance and lower rate bands to the income taxed at the highest UK rates first to maximise relief.

13. Under the OECD Model Treaty Article 4 tie-breaker, in what order are the tests applied to determine treaty residence for a dual-resident individual?

    (1) Permanent home available; if in both/neither, (2) Centre of vital interests (closest personal and economic ties); if undeterminable, (3) Habitual abode; if in both/neither, (4) Nationality; and finally (5) Mutual agreement between the competent authorities.

14. What are the conditions for the temporary non-residence anti-avoidance rules to apply?

    They apply where an individual: (1) was UK resident in at least 4 of the 7 tax years immediately before departure, and (2) the period of non-residence is 5 years or less. If both are met, certain income and gains arising during the non-resident period are taxed in the year of return.

15. Which income and gains are caught by the temporary non-residence rules and taxed in the year of return?

    Capital gains on assets owned before departure; closely-controlled company distributions; certain pension lump sums and flexible drawdown; chargeable event gains on life policies; and remitted foreign income. Gains on assets acquired and disposed of wholly within the non-resident period are generally not caught.

16. How does the starting rate band for savings income work?

    There is a $\pounds 5{,}000$ starting rate band for savings income taxed at $0\%$. It is reduced by non-savings (e.g. employment, pension, property) taxable income above the personal allowance; once non-savings income exceeds the personal allowance plus $\pounds 5{,}000$, no starting rate band remains.

17. State the Personal Savings Allowance (PSA) amounts by taxpayer band.

    Basic rate taxpayer: $\pounds 1{,}000$ of savings income at $0\%$. Higher rate taxpayer: $\pounds 500$. Additional rate taxpayer: $\pounds 0$. The PSA uses up part of the relevant tax band but the income within it is taxed at $0\%$.

18. What is the dividend allowance and what are the dividend tax rates (2024/25)?

    The dividend allowance is $\pounds 500$ (taxed at $0\%$). Dividends above it are taxed at $8.75\%$ (basic rate), $33.75\%$ (higher rate), and $39.35\%$ (additional rate). Dividends are treated as the top slice of income.

19. How is income from jointly-held assets taxed for spouses/civil partners, and how can this be changed?

    Income from jointly-owned property is taxed 50:50 by default, regardless of actual beneficial ownership. Couples can elect (Form 17) to be taxed on their actual beneficial shares, but only if those shares are unequal and supported by evidence; the election takes effect from the date the form is signed. (Dividends on jointly-held shares in a 'close company' are excluded from the 50:50 rule.)

20. Compare the cash basis and accruals basis for property businesses.

    Cash basis (the default for individual landlords with receipts $\leq \pounds 150{,}000$) recognises income when received and expenses when paid. The accruals basis recognises income and expenses when they arise (matching). A landlord can elect out of the cash basis to use accruals — relevant where capital allowances or relief timing differ.

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