Chapter 6 & 7: Tax Reducers

Question 1

Deductible Payments

What are Deductible Payments?

Answer 1

Deductions in Arriving at Taxable Income.

Primarily from Non-Savings Income.

Question 2

Deductible Payments

The Main Deductible Payments are:

Answer 2

• Reliefs for Losses; and
• Relief for Interest Paid.

Question 3

Deductible Payments

The Cap on the Total Amount Deductible is the Greater of:

Answer 3

• £50,000; or
• 25% of Adjusted Total Income (Total Income - Gross Pension Contributions Paid).

Most Likely an Issue in Respect of Loss Relief.

Question 4

Relief for Married Couples

What is the Marriage
Allowance (MA)?

Answer 4

10% of the Personal Allowance.

(Rounded up to the Nearest Multiple of 10)

Question 5

Relief for Married Couples

The Election is Helpful for Couples to Claim if:

Answer 5

One Spouse/Civil Partner has:
* Insufficient Income to Utilise Their Personal allowance; or
* Income Taxed at 0% - e.g., Falls Wholly Within the Starting Rate Band for Savings.

Question 6

Relief for Married Couples

If a Claim is Made, What is the Impact on the Relinquishing Individual?

Answer 6

Their Personal Allowance is Reduced by the Amount Transferred.

Question 7

Relief for Married Couples

If a Claim is Made, What is the Impact on the Gaining Individual?

Answer 7

They Obtain a Reduction in Their Income Tax Liability.
* 20% of the Amount transferred.

Their Personal Allowance Remains the Same.

Question 8

Relief for Married Couples

The Marriage Allowance Transfer Cannot?

Answer 8

Result in a Repayment of Tax.

Question 9

Relief for Married Couples - Conditions

To Qualify, Neither Partner Should Pay Tax at:

Answer 9

• The Higher Rate
• The Dividend Upper Rate (Dividend Allowance ignored)