Ch 1: IT Computation

Question 1

Complete the X

(NSI) A starting rate of X% applies to savings income within the first £X of taxable income

Answer 1

0%, £5,000

Question 2

Saving allowance bands are?

For BR and HR

Answer 2

£1,000 for BR and £500 for HR

Question 3

Dividend allowance

Answer 3

£2,000

Question 4

What happens to PA for income >£100k

Answer 4

PA reduced by £1 for every £2 over £100k

Question 5

What does gift aid donations do to IT comp?

Answer 5

Extend the bands by the gross amount donated (donation x 100/80 i.e 1.25)

Question 6

Calculate by how much the BR and HR bands increase by with a gift aid contribution of £1,500

Answer 6

BR: £37700 + 1500(100/80) = £39,575
HR: £150,000 + 1500(100/80) = £151,875

Question 7

What assumption is made on jointly owned properties by spouses

Answer 7

Income is shared equally between the spouses unless declared otherwise

Question 8

How does Marriage allowance work?

Answer 8

Spouses can elect to transfer £1260 (given) of their PA to their spouse assuming neither spouse is a HR/AR tax payer.

Question 9

How does qualifying loan interest work?

Answer 9

The interest paid on QLI is achieved by deducting it from an individuals income (NSI then SI and finally from dividends)

Question 10

Types of qualifying loan interest (4)

Answer 10

A partner to invest in or lend to a partnership.

– A partner or employee to buy plant & machinery to use in the partnership / employer’s business.

– An employee to invest in / lend to a co-operative or employee-controlled** unquoted trading company** in the EEA.

– An employee shareholder or ≥5% shareholder to invest in or lend to a **close* trading company **in the EEA (not available if the company qualifies for EIS relief – see chapter 27).