Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Personal Taxation - R03 > Calculations > Flashcards

Calculations Flashcards

1
Q

A client has earned income of £80,000. What is their tax bill?

A

£20,700

£11,500 x 0% = £0
£33,500 x 20% = £6,700
£35,000 x 40% = £14,000
£6,700 + £14,000 = £20,700

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Client earns £9,500 from employment and has £9,000 of savings interest. How much tax will they pay?

A

£200

  • £11,500 - £9,500 = £2,000 of the personal allowance remaining.
  • This leaves £7,000 of interest.
  • £5,000 uses the 0% band
  • £1,000 uses the personal savings allowance
  • This leaves £1,000 taxable at 20% = £200
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Client earns £14,000 from employment and savings of £10,000. How much tax will they pay?

A

£1,800

  • £14,000 - £11,500 = £2,500 x 20% = £500
  • £16,500 - £14,000 = £2,500 of 0% band left
  • £2,500 x 0% = £0
  • £1,000 x 0% = £0
  • £6,500 x 20% = £1,300 + £500 = £1,800
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

John earns £11,500 and has £12,000 worth of dividends. How much tax is due?

A

£525

  • £11,500 uses the personal allowance
  • First £5,000 of dividends are taxed at 0%
  • £7,000 x 7.5% = £525
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Bill earns £15,500 and has £15,000 of dividends. How much tax is due?

A

£1,550

  • £15,500 - £11,500 = £4,000 x 20% = £800
  • £15,000 - £5,000 = £10,000 x 7.5% = £750
  • £800 + £750 = £1,550
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Peter aged 40 earns £120,000 gross per annum. He receives building society interest of £15,000 and a dividend payment of £25,000 from his share portfolio. What is his total tax liability for the 2017/2018 tax year?

A

£54,360

Personal Allowance
Income £120,000 + B/Soc Interest £15,000 + Dividend £25,000 = £160,000
£160,000 - £100,000 = £60,000 /2 = £30,000
Therefore Personal Allowance is reduced to £0

Personal Savings Allowance
Total income over £150,000 is no Personal Savings Allowance available

Tax on income
£120,000
£ 33,500 x 20% = £ 6,700
£ 86,500 x 40% = £34,600
£41,300

Tax on Building Society Interest
£15,000 x 40% = £6,000

Tax on dividend income
After considering the earned income and interest there is £15,000 of the higher rate tax band remaining.
The first £5,000 of dividend income will fall within the Dividend Allowance so is not taxable. Please note that although this is not taxable it uses £5000 of the higher rate band
This leaves £10,000 of the higher rate tax band available
The remaining £10,000 of the dividend income is taxed at the additional rate of 38.1%
£10,000 x 32.5% = £3,250
£10,000 x 38.1% = £3,810
£7,060

Total tax = £41,300 + £6,000 + £7,060 = £54,360

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Freddie aged 40 earns £95,000 gross per annum. He receives building society interest of £10,000 and a dividend payment of £7,000 from his share portfolio. What is his total tax liability for the 2017/2018 tax year?

A

£33,550

Personal allowance = £112,000 - £100,000 = £12,000 / 2 = £6,000 reduction
£11,500 - £6,000 = £5,500

Personal savings allowance = £500

Income

£5,500 X 0% = £0
£33,500 x 20% = £6,700
£56,000 x 40% = £22,400
£6,700 + £22,400 = £29,100

Building Society interest

£10,000 - £500 = £9,500 x 40% = £3,800

Dividends

£7,000 - £5,000 = £2,000 x 32.5% = £650

£29,100 + £3,800 + £650 = £33,550

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Bill who is a HRT donates £5,000 to his favourite wildlife charity. How much can the charity reclaim from HMRC?

A

£1,250

£5,000 / 0.8 = £6,250 gross contribution
£6,250 - £5,000 = £1,250 can be reclaimed
Bills basic rate tax band is also extended by £6,250

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Simon, a higher rate taxpayer makes a donation of £15,000 to the NSPCC. How much can the NSPCC reclaim from HMRC?

A

£3,750

£15,000 / 0.8 = £18,750 gross contribution
£18,750 - £15,000 = £3,750 can be reclaimed
Extends Simons basic rate band by £18,750

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A car with a list price of £18,000 and CO2 emissions of 134 g/km what is the benefit cost?

A

£18,000 x 25% = £4,500

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A car with a list price of £25,000 and accessories of £6,000 has emissions of 123 g/km, what is the benefit cost?

A

£31,000 x 23% = £7,130

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Mrs Morton is 57. She receives gross income of £130,000 which includes £10,000 of dividends. She makes a net pension contribution of £10,000. What is her personal allowance in 2017/18?

A

£2,750

For purposes of personal allowance total income is considered, so the dividend allowance does not reduce adjusted income for this purpose.

Net pension contribution of £10,000 = £10,000 / 0.8 = £12,500 gross contribution

£130,000 - £12,500 = £117,500 adjusted net income

£117,500 - £100,000 / 2 = £8,750 reduction to personal allowance is required

£11,500 - £8,750 = £2,750 personal allowance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

An individual has paid £15,000 & £20,000 into pensions in the last 2 years and none this, what carry forward do they have available this year?

A

£125,000

£40,000 - £15,000 = £25,000 + 
£40,000 - £20,000 = £20,000 + 
£40,000 + 
£40,000 
= £125,000
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Jill has 3 children so receives child benefit of £2,501. She earns £57,000. How much is the child benefit charge?

A

£7,000 / 100 = 70% reduction.

£2501 x 70% = £1750.70

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Steve has 1 child and receives child benefit of £1,076. He earns £52,000. How much child benefit does he receive?

A

£2,000 / 100 = 20% reduction
£1,076 x 20% = £215.20
£1,076 - £215.20 = £860.80

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Mr Frankel is 50 and has a salary of £52,000. He has a company car giving him a taxable benefit of £5,000. He pays interest of £1,500 on loan to pay inheritance tax and £4,000 into a retirement annuity contract that does not operate tax relief at source. What is his income tax liability for 2017/18?

A 
£52,000 + £5,000 = £57,000 total income
Minus allowable deductions of £1,500 & £4,000
£57,000 - £1,500 - £4,000 = £51,500
Now we can calculate the liability
£11,500 x 0% = £0
£33,500 x 20% = £6,700
£6,500 x 40% = £2,600
£6,700 + £2,600 = £9,300
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Mr Dixon has earnings of £900 per week. What is his weekly NIC?

A

£85.76

£0 – £157 = £0
£157 – £866 = £709 x 12% = £85.08
£866 + = £34 x 2% = £0.68

£85.08 + £0.68 = £85.76

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Mrs Powell has earnings of £1,125. What are her weekly NIC and her employers?

A

£223.84

Employee
£0 – £157 = £0
£157 – £866 = £709 x 12% = £85.08
£866 + = £259 x 2% = £5.18

£85.08 + £5.18 = £90.26

Employer
£0 - £157 = £0
£157 + = £968 x 13.8% = £133.58

£90.26 + £133.58 = £223.84

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Mr Song is self employed with profits of £48,000. What NIC is payable?

A

£3,523.44

Class 2 – £2.85 x 52 = £148.20
Class 4 – £45,000 – £8,164 = £36,836 x 9% = £3,315.24. £3,000 x 2% = £60

£148.20 + £3,315.24 + £60 = £3,523.44

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

A ring costing £2,000 is sold for £10,000. What is the chargeable gain?

A

£6,666.66

The chargeable gain should be £8,000 but the gain can not exceed 5/3rds of the excess over £6,000.

Therefore £10,000 - £6,000 x 5/3 = £6,666.66 gain.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

A client bought a 2nd property in March 1991 for £80,000. Costs incurred were £2,000.
In 1995 the property had a conservatory added which cost £10,000.
In May 2017 the property was sold for £140,000 incurring costs of £2,500. What is the gain?

A 
Disposal    - 	£140,000
                   -	£2,500
                   -	£10,000
                   -	£80,000
                   -	£2,000
   	           = £45,500 gain
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Nigel sells a unit trust and creates a chargeable gain of £20,000. What is the taxable gain?

A

£20,000 - £11,300 = £8,700

23
Q

A client incurs a chargeable gain of £25,300 in the current tax year from the sale of a share portfolio.

They have made no previous gains and have taxable income of £15,000. What CGT is payable?

A

£1,400

£25,300 - £11,300 = £14,000 taxable gain
£15,000 + £14,000 = £29,000 as the whole gain fits within the basic rate tax band (£33,500) this is taxable at 10%.
£14,000 x 10% = £1,400

24
Q

A client encashes a portfolio of shares creating a gain of £25,000 in the current tax year. Their taxable income is £30,000. What CGT is due?

A

£2,390

£25,000 - £11,300 = £13,700
£30,000 + £13,700 = £43,700. We need to find out how much of the gain now falls in the BRT band.

£33,500 - £30,000 = £3,500 of the basic rate band remains.

Therefore £3,500 of the gain is subject to CGT at 10% and the remainder is at 20% as it falls into the higher rate tax band.

£13,700 - £3,500 = £10,200 in HRT

£3,500 x 10% = £350
£10,200 x 20% = £2,040
£350 + £2,040 = £2,390 CGT due

25
Q

A client with gross income of £24,400 sells a portfolio of collective investments with a gain of £23,000. What CGT is due?

A

£1,430

£23,000 - £11,300 = £11,700
£33,500 - £23,500 = £9,100 basic rate band remains

£11,700 - £9,100 = £2,600 in HRT

£9,100 x 10% = £910
£2,600 x 20% = £520
£910 + £520 = £1,430

26
Q

Miss Rich invested £21,000 into a share portfolio 7 years ago. It is now worth £37,000 and is now encashing. Costs of £900 were incurred at the time. What is the CGT liability if her taxable income is £31,500?

A

£560

£37,000 – £21,000 – £900 = £15,100 gain
£15,100 – £11,300 (annual exemption) = £3,800 taxable gain

£33,500 – £31,500 = £2,000 remaining in the basic rate band

£2,000 x 10% = £200
£1,800 x 20% = £360

£200 + £360 = £560

27
Q

Mr Patterson bought his buy to let property for £122,000 and is now looking to sell this when it is valued at £148,000 with associated costs of £2,500. Mr Patterson has taxable income of £27,000 and has made no other gains or losses in the 17/18 tax year. How much CGT is due?

A

£2,766

£148,000 - £122,000 - £2,500 = £23,500 gain
£23,500 - £11,300 annual exemption = £12,200 taxable gain

Taxable income of £27,000 leaves £6,500 of the basic rate band remaining
Remember gains on second properties are taxed at 18% & 28%

£6,500 x 18% = £1,170
£5,700 x 28% = £1,596
£1,170 + £1,596 = £2,766

28
Q

Mr Jones has a unit trust investment that is currently worth £104,000. When it was taken out in 2005 it was for £60,000 and the units were £1 each.

Mr Jones does not want to incur any CGT so would like to know how much he can withdraw within his CGT allowance.

A

£104,000 / 60,000 = 1.7333. 1.7333 – 1 = 0.7333 gain per unit.

CGT allowance is £11,300 / 0.7333 = 15,409 units can be encashed within CGT allowance.

15,409 units x 1.7333 unit price = £26,708.41 can be withdrawn

29
Q

Mr X wants to encash his unit trust but only up to the CGT allowance. They units were bought at £2.58 per unit and are now worth £4.97 per unit. How many units can he encash?

A

£4.97 – £2.58 = £2.39 gain per unit

£11,300 / £2.39 = 4,728 units

30
Q

Helen purchased 1,500 shares on the 1st June 2003 for £3,000. 2,000 on 30 April 2004 for £4,000 and 3,000 on the 30 May 2006 for £6,000. In 2017 she sold 5,000 shares for £25,000. How much of the £25,000 will be subject to CGT?

A

Based on the purchase amounts all shares cost a base price of £2 per share.

6,500 shares bought for a total of £13,000.

£25,000 / 5,000 = £5 a share. So a gain of £3 per share.

£5,000 * £3 = £15,000 gain - £11,300 annual allowance = £3,700

31
Q

Single person with an estate of £600,000 passes away leaving £27,500 to charity and the remainder to their family and friends. How much IHT is due?

A

£89,600

£600,000 - £325,000 = £275,000
£275,000 x 10% = £27,500 
Therefore this person would qualify for the 36% IHT rate.
£600,000 - £325,000 - £27,500 = £247,500
£247,500 x 36% = £89,100 IHT due
32
Q

Mrs Donnelly’s husband passed away in July 2002 when the Nil Rate Band was £250,000. He left £50,000 to his brother and the rest of his estate to his wife.
How much NRB will Mrs Donnelly have remaining on her death if she were to pass away in the current tax year?

A

£50,000 / £250,000 = 20% of Mr Donnelly’s NRB used on first death

Therefore Mrs Donnelly has available to her 180% of the standard NRB.

£325,000 x 80% = £260,000

£325,000 + £260,000 = £585,000 NRB available on 2nd death

33
Q

Mr O’Brien gifts 92,000 to his daughter as part of his will; he died in the August 2006 when the NRB was 285,000. The remainder of his estate passes to his wife. On her death the estate is worth 725,000 and the NRB at the time is 325,000. What IHT liability is left on 2nd death?

A

£92,000 / £285,000 x 100 = 32.28% used, 67.72% remaining

£325,000 x 67.72% = £220,090 transferable NRB

On 2nd death £325,000 + £220,090 = £545,090 NRB
£725,000 – £545,090 = £179,910 x 40% = £71,964

34
Q

Mrs Whitaker gifts £23,000 to her son as part of her will; she died in the August 2008 when the NRB was £312,000. The remainder of his estate passes to her husband. On his death in the current tax year, how much uplift can he get on his NRB?

A

£23,000 / £312,000 x 100 = 7.37% used, 92.62% remaining

£325,000 x 192.62% = £626,015

35
Q

A man gifts £450,000 & dies 4 ½ years later. What is the liability on this gift?

A

£450,000 – £325,000 = £125,000

£125,000 x 40% x 60% (taper) = £30,000

36
Q

A woman gifts £500,000 & dies 6 ½ years later. What is the liability on the gift?

A

£500,000 – £325,000 = £175,000

£175,000 x 40% x 20% (taper) = £14,000

37
Q

Simon gifts £400,000 to his son Benjamin, as this is a PET there is no tax due on the transfer. Simon sadly passes away 4 ½ years later. What tax is due on the gift assuming there was no gift allowance available at the time of the gift but Simon had made no other gifts?

A

£18,000

£400,000 - £325,000 = £75,000
£75,000 x 40% IHT = £30,000
30,000 x 60% taper relief = £18,000

38
Q

Nina gifts £200,000 to her son Peter 6 years ago, £200,000 to her daughter Toni 4 years ago and finally £200,000 to her cousin Jane 2 years ago. Nina sadly passes away in the 17/18 tax year. What tax is due, if any, on the gifs assuming there was no gift allowance available at the time of the gift but Nina had made no other gifts?

A
  • £200,000 gift to Peter = within the NRB so no tax due
  • £200,000 gift to Toni = £125,000 of NRB is remaining so £200,000 - £125,000 = £75,000 x 40% IHT = £30,000 x 60% taper = £18,000 paid by Toni
  • £200,000 gift to Jane = no NRB remaining so £200,000 x 40% = £80,000 no taper relief available as 2 years.
39
Q

Marjorie gifts £150,000 to her nephew 6 years ago, £225,000 to her niece 5 years ago and finally £50,000 to her aunt 4 years ago. Marjorie sadly passes away in the 17/18 tax year. What tax is due, if any, on the gifs assuming there was no gift allowance available at the time of the gift but Marjorie had made no other gifts and on her residual estate of £300,000 (ignoring RNRB)?

A
  • £150,000 gift to nephew = within the NRB so no tax due
  • £225,000 gift to niece = £175,000 of NRB is remaining so £225,000 - £175,000 = £50,000 x 40% IHT = £20,000 x 40% taper = £8,000 paid by niece
  • £50,000 gift to Jane = no NRB remaining so £50,000 x 40% = £20,000 x 60% taper = £12,000

No NRB would be remaining for the residual estate so £300,000 x 40% = £120,000 IHT paid by executors.

40
Q

A client invests £627,000 into a gift trust and has made no previous gifts. Assuming the trustees choose to pay the tax, what is the immediate tax charge?

A

£627,000 – £6,000 (2 x AGA)
£621,000 – £325,000 (NRB) = 296,000
296,000 x 20% = £59,200 immediate tax charge

41
Q

A client places £500,000 into a gift trust and has made no previous gifts. What is the immediate tax charge?
Assuming the settlor chooses to pay the tax.

A

£500,000 – £6,000 (2 x AGA)
£494,000 – £325,000 (NRB) = £169,000
£169,000 x 25% = £42,250 immediate tax charge

42
Q

A client set up a trust for 250,000. Its value today on its 10th anniversary is 400,000. What is the 10 year periodic charge?

A

400,000 – 325,000 = 75,000

75,000 x 6% = 4,500

43
Q

A trust that paid a £4,500 penalty at the 10 year anniversary on a fund worth £400,000 has decided to distribute 50,000 of the assets 8 years later. What is the proportionate exit penalty?

A

4,500 / 400,000 = 1.13%
1.13 x 32/40 = 0.9%
50,000 x 0.9% = 450 tax

44
Q

What and when are the payments on account and balancing payments for a sole trader with the following tax due for 2016/17?

Total tax due for 15/16 = £40,000
Total tax due for 16/17 = £55,000

A

Tax for 16/17

31 January - £20,000
31 July - £20,000
31 January - £15,000

45
Q

What and when are the payments on account and balancing payments for a sole trader with the following tax due for 2016/17?

Total tax due for 15/16 = £50,000
Total tax due for 16/17 = £42,000

A

Tax for 16/17

31 January - £25,000
31 July - £25,000
31 January – refund of £8,000

46
Q

Steve buys a residential property for £325,000 in the current tax year. What stamp duty is payable?

A

£6,250

£0 - £125,000 = £0
£125,000 - £250,000 = £125,000 x 2% = £2,500
£250,000 - £325,000 = £75,000 x 5% = £3,750

£2,500 + £3,750 = £6,250

47
Q

Janet buys a residential property for £585,000 in the current tax year, of which £12,000 can be attributed to the fittings left in the house. What stamp duty is payable?

A

£18,650

£585,000 - £12,000 = £573,000

£0 - £125,000 = £0
£125,000 - £250,000 = £125,000 x 2% = £2,500
£250,000 - £573,000 = £323,000 x 5% = £16,150

£2,500 + £16,150 = £18,650

48
Q

A company whose accounting period ends 31 October 2017 has taxable profit of £325,000. How much corporation tax is due for this financial year?

A

£63,103

£325,000 x 5/12 @ 20% = £27,083
£325,000 x 7/12 @19% = £36,020

£27,083 + £36,020 = £63,103

49
Q

Amy invested £35,000 into a bond 6 and a half years ago. How much is she entitled to take from the bond without incurring a chargeable gain?

A

£35,000 x 5% = £1,750

£1,750 x 7 = £12,250

50
Q

Miss Lancaster placed £52,000 into a bond 9 years ago. It is now worth £75,000. How much can she withdraw today without incurring any additional tax?

A

£52,000 x 5% =£2,600

£2,600 x 9 = £23,400

51
Q

Mrs Thorne invested £30,000 into an investment bond 16 years ago and immediately commenced a 5% income. She encashes the bond today when it is worth £45,000. What is the chargeable gain?

A

£45,000 + (£1,500 x 11 = £16,500) – £30,000 = £61,500 – £30,000 = £31,500 gain

52
Q

Mr Parker invests £26,250 into a Life Assurance bond exactly 8 years ago. He encashes this today for £40,000. The client has taxable income of £32,500. What tax liability (if any) occurs on this gain?

A
  • £40,000 – £26,250 = £13,750
  • £13,750 / 8 = £1,718.75 top slice
  • £32,500 + £1,718.75 = £34,218.75
  • £34,218.75 – £33,500 = £718.75
  • £718.75 x 20% = £143.75
  • £143.75 x 8 = £1,150
53
Q

Daniel invests £30,000 into a bond 13 years ago. He commences an annual income £1,500 per annum. He encashes the bond today when it is worth £55,000. Daniel’s taxable income for 2017/18 is £31,700. What tax liability (if any) occurs on this gain?

A
  • £1,500 x 13 = £19,500
  • £55,000 + £19,500 = £74,500 – £30,000 = £44,500
  • £44,500 / 13 = £3,423.07
  • £31,700 + £3,423.07 = £35,123.07
  • £35,123.07 – £33,500 = £1,623.07
  • £1,623.07 x 20% = £324.61
  • 324.61 x 13 = £4,219.98 tax to pay

Personal Taxation - R03 (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions