Chapter 2 - Introduction to Income Tax

Question 1

Income exempt from income tax

Answer 1

Income from individual savings accounts
Income from national savings certificates
Interesting arising from save as you earn
Income from investments held in Child Trust Fund acc
Dividends on shares held in Venture Capital Trusts (t&cs)

Question 2

Exempt from employment income:

Answer 2

Certain minor benefits provided by employers
Bonus’ of up for 3.6k dcvd by employees of companies owned by employee ownership trusts
First 30k of ex gratis for redundancies
Certain lump sums payable under reg pension schemes
Operational allowance paid to UK armed forces in specific locations

Question 3

Exempt from property income

Answer 3

up to £7500 under rent a room scheme

Question 4

Other exempt income:

Answer 4

winnings from betting - premium bonds
maintenance payments
income from scholarships

Question 5

What are the income rates for individuals

Answer 5

First 33,500 - 20%
Next 116,500 - 40%
Remaining after 150,000 45%

Question 6

Under what circumstances are tax bands increased?

Answer 6

If the taxpayer makes Gift Aid donations in the year or makes pension contributions that are relived at source