Chapter 2 - 2.3 - Withdrawal of the Personal Allowance

Question 1

Who is the personal allowance gradually withdrawn from?

Answer 1

The personal allowance is gradually withdrawn from individuals with income in excess of £100,000

Question 2

What is the withdrawal of an individual’s personal allowance based on?

Answer 2

The taxpayer’s adjusted net income (ANI)

Question 3

Which should you use in the exam - ANI or NI?

Answer 3

You should use the net income figure unless you are given a figure for the adjusted net income

Question 4

What is the formula to calculate the restriction on personal allowance?

Answer 4

If ANI > 100,000 the personal allowance is restricted by (ANI - £100,000) x 1/2

Question 5

What should you do if the resulting personal allowance is not a whole number?

Answer 5

It must be rounded up to the nearest pound

Question 6

At what income will a taxpayer be entitled to no personal allowance?

Answer 6

An income of £125,140, as the excess above £100,000 is twice the personal allowance