Income tax Flashcards
What income types is income tax charged on?
Employment income inc p11d, self employed profits and pension income
Rental Income
Savings Income
Dividend Income
Life assurance policy gains
What is Personal Allowance in 2023/24
£12,570
When is the Personal Allowance Reduced?
If income is greater than £100,000 the allowance is reduced by £1 for every £2 of income over £100K so income of £125,140 will lose their entire allowance.
Explain the Marriage Allowance?
Up to £1,260 of unused allowance can be transferred from a non tax paying spouse (income below p.a) to a basic rate paying spouse.
This allows a max savings of £252 (£1.260 x 20%).
What order is income taxed?
Non-savings income
Savings income
Dividend Income
Onshore bond gains
What is non-savings income?
First to be taxed includes employment income, self employment profits, pension income, rental income and trust income
Explain the starting rate of income tax?
£5,000 available at 0% on savings income but this is dependent on other income.
If other income is £17,570 or higher there is no starting rate.
If other income is below £17,570 this is the amount of savings income that can be taxed at 0% up to £5,000
What is the dividend allowance?
£500
Everyone gets this no matter how much income they have.
What are the dividend tax rates above the £500 threshold for individuals?
8.75% basic
33.75% higher
39.95% additional
How much is the personal savings allowance?
£1,000 basic rate tax payers
£500 higher rate tax payers
£0 additional rate tax payers
How is Adjusted Net Income Calculated?
Add together all taxable income
Deduct gross pension contributions made directly by the individual
Deduct gross value of gift aid payments made by the individual
What is income tax consequences on a designation account on a GIA?
Income tax liability is on the child unless set up by parents if income above £100 per annum tax is assessed on them
