Calculations

Question 1

6 steps of the income tax calculation

Answer 1

-Add together gross value
-Deduct allowable deductions eg pension, charity
-Deduct personal allowance
-extend tax band by pension/charity gross amount
-calculate liability (20/40/45)
-deduct tax reducer eg seis/married couples allowance /12

Question 2

Spell out the 7 stages of capital gains tax calculation

Answer 2

1. Disposal value minus cost of selling
2. Minus acquisition price
3. Minus cost of purchase
4. Minus tax year losses on other disposals
5. Minus annual exemption
6. Deduct carry forward losses
7. Apply 10/20/+8(second property/buy to let)

Question 3

What are the five stages of calculating inheritance tax liabilities?

Answer 3

-calculate gross estate eg. Assets, 1/2 home, any transfers in last 7 years
-minus debts/expenses
-minus exempt gifts, transfers to spouse, charity donations
-minus reliefs eg business, agri
-minus nrb/rnrb