Income Tax computation Flashcards

1
Q

How much is the Blind person’s allowance?

A

2500

-Will increase the PA by 2500

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2
Q

In what order is income taxed?

A

1) Non-Savings income
2) Savings Income
3) Dividend Income

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3
Q

What are the rules on the 0% band for Savings income?

A

IF NO NSI >5000
- 0% on first £5000

if NSI

  • Basic 1000
  • Higher 500
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4
Q

What are the rules on the 0% band on dividend income?

A

The first £2000 of dividend income is taxed at 0%

However it still uses the other bands

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5
Q

What are the rules for tax on gift aid for basic rate tax payers?

A
  • Relief is given at the time of payment by only paying 80% of the total donation
  • No adjustment needed
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6
Q

What are the rules for tax on gift aid for higher & additional rate tax payers?

A
  • 20% tax relief is granted at the time of payment

- Additional relief is given by extending the basic and higher bands

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7
Q

What are the qualifying interest payments purposes that are deductible from total income? (4)

A

1) loans to buy plant / machinery for use in partnership / employment
2) Loans to buy an interest in a close company / employee controlled company / cooperative
3) Loans to invest in a partnership o make a loan to a partnership
4) Loans to pay inheritance tax

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8
Q

How much tax relief can you claim on qualifying interest payments?

A

Higher of:

1) £50,000
2) 25% of adjusted total income

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9
Q

How is adjusted total income caluclated?

A

Adjusted total income is total income plus payroll giving less gross pension contributions

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10
Q

How much is the transferable marriage allowance and what are the rules?

A

1250

rules:

1) Transferor has no tax liability
2) The recipient is a basic rate tx payer
3) Both individuals born after 1935
4) The transferor must make an election !

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