Income tax

Question 1

In what order is income taxed?

Answer 1

Non-savings income
Savings income
Dividend income
Gains/excesses

Question 2

How is the monetary value of a company car calculated as a benefit-in-kind?

Answer 2

CO2 emissions value is used to obtain a % rate that is applied to the list price, with personal contributions up to £5k able to be deducted from the list price

Question 3

How are in-house benefits calculated as a benefit-in-kind?

Answer 3

Where the benefit consists of shared facilities, only the marginal cost is taxable & can be offset by any personal contribution

Question 4

What value of beneficial loan (below official rate) is classed as a benefit-in-kind?

Answer 4

£10k

Question 5

At what levels of income is the starting rate band useful?

Answer 5

Between £12,570 and £17,570

Question 6

Name four examples of dividend income

Answer 6

Shares
Private equity
Investment trusts
Collective investments

Question 7

Name four examples of savings income

Answer 7

Interest payments
Coupon payments
Interest element of PLA
Collective investments

Question 8

What options do the self-employed have as allowable deductions from income?

Answer 8

Trading allowance
Allow expenses against income

Question 9

What options do property investors have as allowable deductions from income?

Answer 9

Property allowance
Allow expenses against income

Question 10

What options do the employed & directors have as allowable deductions from income?

Answer 10

Individual pension contributions via net-pay arrangement
Charitable donations via payroll giving

Question 11

Can interest payments on qualifying loans be deducted from gross income?

Answer 11

Yes - i.e. to purchase shares in borrower’s company

Question 12

How do PPP contributions work to expand the BRT band (i.e. for someone earning £70k who makes an £8k pension contribution)?

Answer 12

Pension provider grosses contribution up to £10k
This can then be added to the BRT band
Tax due with contribution: (377000.2)+(197300.4)=£15,432
Tax due without contribution: (477000.2)+(97300.4)=£13,432

Question 13

How can HRT/ART taxpayers expand their BRT band?

Answer 13

Personal pension contributions
Charity donations via gift-aid

Question 14

What % can property investors receive a tax reduction on for their mortgage interest payments?

Answer 14

20%

Question 15

How does the marriage allowance work?

Answer 15

Non-taxpayer can transfer up to 10% of PA to spouse/civil partner
Can use up to 4 years unused PA if eligible & partner was BRT the entire time