income tax

Question 1

Income tax

Answer 1

Paid by individuals (employees, investors, partners and self-employed) on their taxable
income.

Question 2

Taxation at source:

Answer 2

Some income is received by the taxpayer net of tax, which means that tax is already deducted at the source of the income

Question 3

Gross income:

Answer 3

Income before any form of deduction has been made

Question 4

Non-savings income:

Answer 4

Employment income, Trading profits, Property income, Miscellaneous income

Question 5

Savings income:

Answer 5

Interest from investments

Question 6

Dividend income:

Answer 6

Dividends from UK and overseas companies

Question 7

Net income

Answer 7

The total chargeable income before deducting the personal allowance

Question 8

Taxable income:

Answer 8

For the purposes of the examination, taxable income means net income after deduction of the personal allowance

Question 9

Personal allowance:

Answer 9

The amount of income on which no income tax is charged

Question 10

Tax liability:

Answer 10

The total amount of income tax due from a taxpayer

Question 11

Savings income nil rate band:

Answer 11

The first £1,000 (basic rate taxpayer) or £500 (higher rate taxpayer) of savings income, above the starting rate band, on which income tax is charged at the savings nil rate (0%)

Question 12

Dividend nil rate band:

Answer 12

The first £1,000 of taxable dividend income on which income tax is charged
at the dividend nil rate (0%).

Question 13

Tax payable or repayable:

Answer 13

The amount of income tax payable by a taxpayer (or repayable by HMRC) under self-assessment after taking into account tax deducted at source.

Question 14

Gift Aid:

Answer 14

The Gift Aid Scheme gives tax relief for cash donations made by individuals to charities

Question 15

Marriage allowance:

Answer 15

In 2023/24, in limited cases a spouse or civil partner may elect to transfer £1,260 of their personal allowance to their spouse/civil partner