Income Tax

Question 1

Give examples of allowable deductions

Answer 1

Interest payments in certain qualifying loans

Charitable giving-

Payroll giving is an allowable deduction - make contributions to nominated charity gross.
Gift aid is a basic rate band extender

Certain pension contributions:

Net pay arrangements: allowable deduction- taken off before tax calculation

Relief by claim scheme: allowable deduction, contributions to this paid gross

Relief at source schemes:

Here the contribution is paid net of 20% from after tax been deduction. Because of this the provider reclaims the brt paid, the contribution is then also a brt band extender

Question 2

What can reduce your personal allowance?

Answer 2

Underpaid tax from previous years
Employee benefits like company car
Adjusted net income over 100,000

Question 3

What tax code means get no personal allowance

Answer 3

A K tax code

Question 4

What are the deductable allowances?

Answer 4

Personal allowance - 12,570

Personal savings allowance:
BRTP - 1000
HRTP - 500
ARTP - 0

Dividends Allowance:

For all tax payer £1000 allowance - note like advice thus will use up part of the basic or higher rate band for tax

Transferable personal allowance:

Married couples can transfer 10% of personal allowance - £1260 (rounded up) - note this can only be to a basic rate tax paying spouse. A higher or additional rate tax payer cannot receive this

Known as marriage allowance

Question 5

What is the starting rate for savings income

Answer 5

5000

Question 6

What are the dividends rate?

Answer 6

Where dividends exceed the 1k allowance they are taxed at the following rate

BRTP - 8.75%
HRTP - 33.75%
ARTP - 39.35