2

Question 1

When are personal allowances restricted

Answer 1

If persons adjusted net income exceeds £100,000

Question 2

What are the methods of giving relief

Answer 2

Deducting from net income or as a tax reducer

Question 3

What is deducting from net income

Answer 3

Gives relief at taxpayers highest marginal rate of tax

Question 4

What is Tax reducer

Answer 4

Deducted at a certain rate to arrive at Tax borne. Everyone has relief at same rate

Question 5

What is gift aid 

Answer 5

Any gift to charity by a UK resident
Allowed as long as there is only very minor benefit from gift
Declaration to charity is needed
Charity can recover basic rate tax
Donor must be a taxpayer if not PA restricted to collect tax at BR on gift. For HR taxpayer BR extended to ensure relief at 40 or 45%

Question 6

What is National insurance contributions class one

Answer 6

Primary Payable by Employees Aged 16 to retirement

Secondary Paid by employers on all employees are used over 21

Question 7

How is class one national insurance contribution calculated

Answer 7

Based on earnings - basically gross pay before deduction of any expenses or pension contributions plus on benefits in kind if convertible into cash

Benefits in kind – in general not liable to NIC for employees. However Employers are liable to NIC on all benefits in kind except childcare provision

Contribution periods are not cumulative unlike PAYE

NIC for directors are calculated on a yearly basis