Chapter 4 - Payments and gifts eligible for tax relief

Question 1

What payments and gifts are deductible from a taxpayers total income for the tax year in which the payment is made? (4)

Answer 1

1. Eligible interest payments
2. Certain “annual payments”
3. Gifts of listed shared or securities
4. Gifts of land or buildings to a charity

Question 2

What are the 5 eligible interest payments?

Answer 2

1. A loan to purchase plant or machinery which is necessarily acquired for the use in the taxpayers employments. Eligible in year of purchase for interest up to next 3 years. Not available on propelled vehicles or cycles
2. A long to purchase PPE for use in the business partnership
3. A loan to purchase shares on a company whereby they are a participator.
4. A long to purchase shares in an employee controlled company.
5. A loan to pay inheritance tax

Question 3

Limits on eligible interest payments?

Answer 3

Generally must not exceed the greater of £50,000 or 25% of taxpayers total income

Question 4

Annuity eligibility

Answer 4

First £30,000 of a loan taken out before 9March 1999

Question 5

Gifts of pre-eminent property to nation?

Answer 5

30% tax reduction spread over any of the following 4 years or year in which item is disposed of.

Question 6

Gift aid qualifying factors (4)

Answer 6

1.Donor is uk resident or a non-resident with income or gains charged to UK tax
2. donation take form of gift or money which is not repayable to donor
3. donor receives no benefit from the gift, or does not receive a gift exceeding following limits:
- 25% of the amount of the gift, if the gift does not exceed £100
- £25 if the gift exceeds £100 but does not exceed 1000
5% of the amount of the gift if the gift exceeds £1000
4. donor makes a gift aid declaration with regard to the donation.

Question 7

What rate is interest paid on home loan before 9 march 1999 relieved at?

Answer 7

23%

Question 8

At what rate of income tax is each of the following payments relived at in 17-18?

a. qualifying home loan used to buy annuity
b. interest on loan used to buy interest in partnership
c. qualifying maintenance payments
d. gift of pre eminent property to nation

Answer 8

a. 23%
b. marginal rate
c. 10%
d. 30%