Income Tax - Lecture 2

Question 1

Income tax charges on

Answer 1

Receipts expected to recur eg wages/ profits from running business

Question 2

UK resident taxpayer liable to UK income tax on

Answer 2

UK and overseas income

Question 3

Non savings income: (2)

Answer 3

• Earned income

- Property income

Question 4

Earned income

Answer 4

From employment (salary, bonus, pension), or from self employment

Question 5

Trading income

Answer 5

Profit from income less expenses

Question 6

Savings income

Answer 6

Interest received gross

Question 7

Dividend income

Answer 7

Dividends received gross

Question 8

Exempt income (4)

Answer 8

• Interest on ISAs
• Interest on National Savings Certificates
• Premium bond prizes
• Lottery/ gambling winnings

Question 9

Qualifying interest paid (3)

Answer 9

Relief for interest paid if:

• Loan for partner to invest into partnership/ LLP
• Loan to purchase shares in employee run UK resident trading company
• Loan to purchase plant and machinery to use solely for employment/ partnership purposes

Question 10

Personal allowance over £100,000

Answer 10

Reduced by £1 for every £2 over. Therefore any income over £123,000 > PA = nil

Question 11

Transferrable amount of PA (Marriage Allowance)

Answer 11

Maximum £1,150 can be transferred if unused. Both transfer and recipient must be basic rate tax payers

Question 12

Gift aid payments

Answer 12

Payments made are treated as being net of the basic rate. Charity can recover 20% directly from HMRC.

Question 13

Gift aid payments > Basic tax rate payer

Answer 13

No effect on position

Question 14

Gift aid payments > Higher rate tax payer

Answer 14

Extend basic rate band by gross amount of gift aid donation