Chapter 1 - IT Liability

Question 1

Tax Year

Answer 1

2018/19 - 6 April 2018 - 5 April 2019

Question 2

Personal Allowance

Answer 2

PA in £11,850 for 18/19. PA reduces by £2 for every £1 over £100,000 earned until all gone at £123,700.

Question 3

Non Savings Income

Answer 3

Employment, trading, property income make up NSI. Taxed at 20%, 40% and 45%

Question 4

Savings Income

Answer 4

Interest - taxed at 0%, 20%, 40% & 45%. Savings allowance of £1,000 for basic rate payers and £500 for higher rate payers.

Question 5

Savings Income 0% Starting Rate

Answer 5

Where NSI is less than £5k, the rest of the £5k made up of interest is taxed at 0%

Question 6

Dividends

Answer 6

Taxed at 7.5%, 32.5% and 38.1%. Everyone has a dividend allowance of £2,000 which will be taxed at 0%

Question 7

Deductible Payments

Answer 7

Usually interest paid on qualifying loans eg a loan to join a partnership. Capped at greater of £50k or 25% of adjusted income

Question 8

Tax Bands and Rates

Answer 8

£0 - £34,500: 20% ie £34,500 @ 20%
£34,501 - £150,000: 40% ie £116,500 @ 40%
£150,000+ @ 45%

Question 9

PAYE

Answer 9

Remember to deduct PAYE already deducted if doing a calculation