1 - Income Tax (I)

Question 1

Which taxpayers may extend their income tax bands by the
addition of the gross value of payments into pension schemes, subject to relief at source and donations to charity under gift aid?

Answer 1

Basic and higher rate, not additional

Question 2

For 2023/24, Maud has pension income of £15,000 and savings income of £6,000. Calculate the tax due.

Answer 2

£972

Question 3

What are the 6 stages of calculating income tax?

Answer 3

1. Calculate all the pre-tax income for the year, distinguishing all the different types of income
2. Deduct reliefs deductible from total income
3. Deduct the personal allowance of £12,570 (and, if applicable, the blind person’s allowance)
4. Calculate the amount of any payments for which higher and additional rate relief is given by extending the basic and higher rate bands.
5. Calculate the tax on the remaining income.
6. Deduct any tax reducers.

Question 4

Income is taxed in which order?

Answer 4

Earnings, pensions, rental income and all other income, savings, dividend, chargeable gains

E PROS DC