1 - Income Tax (Self-Test Questions) Flashcards
What are the main Acts containing the income tax legislation?
The Income Tax Act 2007, the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) and the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).
Under what legislation are a self-employed person’s profits taxed?
ITTOIA part 2.
To what date or dates may property income accounts be drawn up for tax purposes?
5 April or 31 March.
What did Pepper v. Hart (1992) decide?
That the taxable benefit for an employee on in-house benefits provided by an employer is based on the marginal cost only.
If an employer provides a beneficial loan to an employee, what is the basic benefit for tax purposes?
The difference between the interest at the official rate and the actual interest paid.
An employer purchased a property for £120,000 in 2021 and spent £13,000 on improvements during 2022. From 1 January 2023 onwards, the property was let to a senior employee for an annual rent of £3,000. The property has an annual value of
£5,600. Calculate the taxable benefit for 2023/24.
Basic benefit: £5,600 – £3,000 = £2,600
Additional benefit: £120,000 + £13,000 – £75,000 = £58,000 at 2.25% = £1,305
Total benefit: £3,905
Can a French national claim UK personal allowances?
Yes (France is part of the European Economic Area (EEA) and the entitlement continues despite the UK leaving the EEA).
In what way is higher- and additional-rate tax relief obtained for pension contributions paid net?
By extending the basic- and higher-rate tax bands by the amount of the gross payment.
How much of the personal allowance can be transferred to a spouse or civil partner for 2023/24?
£1,260 (10% of the personal allowance of £12,570 for 2023/24 (rounded up from £1,257)).
When is a trust subject to UK income tax?
When it has at least one trustee who is resident in the UK.
Are trustees entitled to a personal allowance for trust income?
No.
What is the current rate of tax applicable to discretionary trusts for savings interest?
20% within the standard rate band, then 45%.
If a father sets up a trust for his eight-year-old son that generates £150 income, who is taxed on this?
The father is taxed on the full £150.
