Other stuff

Question 1

Exempt income for income tax

Answer 1

Interest on National Savings Certificates
 Income (interest or dividends) from Individual Savings Accounts (ISAs, sometimes called NISAs)
 Betting, competition, lottery and premium bond winnings
 Some social security benefits such as housing benefit and child benefit
 First £7,500 of gross annual rents (rent a room scheme)
 Scholarships
 Income tax repayment interest
 Universal Credit
 Apprenticeship bursaries paid to care leavers
 Payments made under compensation schemes (eg the Windrush Compensation Scheme)

Question 2

Define net income in income tax

Answer 2

The total chargeable income before deducting the personal allowance

Question 3

Define taxable income in income tax

Answer 3

Net income after deduction of the personal allowance.

Question 4

What is the personal allowance £?

Answer 4

12,570

Question 5

When do you start losing the personal allowance and at what rate?

Answer 5

100k start
Lose £1 for every £2 over the allowance
Once you reach 125,140 there is none left

Question 6

What is adjusted net income?

Answer 6

Net income less gross personal pension contributions and gross Gift Aid contributions

Question 7

What is the blind persons allowance and can it be transfered?

Answer 7

Increase personal allowance by £2,870 and can be transferred to a spouse if they cannot use it

Question 8

Order of income tax computation

Answer 8

Incomes
Less reliefs - eg loss relief
= Net income
Less personal allowance
=Taxable income
Tax rates and calcs

Question 9

What savings nil rate band do basic rate tax payers get?

Answer 9

1000

Question 10

What savings nil rate band to higher rate tax payers get?

Answer 10

500

Question 11

What savings nil rate bank to additional rate tax payers get?

Answer 11

0

Question 12

Does savings nil rate band and dividends nil rate band count towards the usage of rate bands?

Answer 12

Yes

Question 13

What is the dividend nil rate band?

Answer 13

1000 - doesn’t change for tax level

Question 14

How do you deal with gift aid

Answer 14

Gross up the amount
Add it to the bands

Question 15

Can you carry back a gift aid donation?

Answer 15

Yes you can carry back to the prior tax year
The election must be done by 31st Jan following end of prior tax year.

Question 16

Gifts of qualifying assets to charity for income tax
What qualifies?

Answer 16

Shares / securities listed/dealt on stock exchanges
Shares in an open-ended investment company
Units in a unit trust
Holdings in foreign collective investment schemes

Question 17

Gifts of qualifying assets to charity for income tax
How to calculate the deduction?

Answer 17

The value of the deduction = market value of the shares + costs of disposal less consideration paid by the charity.

Question 18

Payroll giving schemes How do you deal with them?

Answer 18

Deduct from the income at source so lowers initial income

Question 19

How is income from jointly owned properties calculated?

Answer 19

Shares equally between spouses by default
A declaration can be made for actual ownership %
Notice must be sent to HMRC within 60 days of the declaration

Question 20

What is the marriage allowance and when does it apply?

Answer 20

Can elect to transfer £1260 of personal allowance

Applies when transferor has no tax liability or is a basic rate after reduction
AND the recipient is a basic rate payer

Question 21

Do Scotland and Wales have the right to set their own income tax bands?

Answer 21

Yes
Wales didn’t change
Scotland has different for non-savings

Question 22

Who gets child benefit?

Answer 22

Adjusted net income of less than 50k gets it
Charge of 1% for each £100 between 50 and 60k
Over 60k don’t get it
The charge is added on to the tax liability

Question 23

Are interest on loans to buy p & m in a partnership or employment deductible?

Answer 23

Yes for the first three years of the loan

Question 24

Is interest on a loan to buy an interest in a close company (less the 5 shareholders) or an employee controlled company deductible?

Answer 24

Yes

Question 25

Is interest on a loan to invest in or lend to a partnership deductible?

Answer 25

Yes

Question 26

Is interest on a loan to buy shares in or lend money to a co-operative (if you are an employee) deductible?

Answer 26

Yes

Question 27

Is interest on a loan to pay inheritance tax allowable?

Answer 27

Yes for the first 12 months

Question 28

What are the three ways property income can be calculated?

Answer 28

(1) Rental income less the property allowance
(2) Rental income received less allowable expenditure paid (cash basis)
(3) Rental income receivable less allowable expenditure payable (accruals basis)

Question 29

What is the property allowance?

Answer 29

Individual gets £1000 deduction per tax year but then cannot use expenditure

Question 30

When is the cash basis used as default on property income?

Answer 30

Property receipts not exceeding £150,000

Question 31

What are allowable expenses of property income?

Answer 31

Legal, professional and administrative costs
 Interest paid eg on loans to buy or improve non-residential property
 Rates and taxes paid by the landlord eg council tax, water rates
 Ancillary services provided by the landlord eg cleaning, gardening

 Insurance for the property
 Replacement of domestic items such as furniture and furnishings – see later
 Repairs and maintenance eg painting, redecoration
 Fixed rate reductions for motor vehicles used in the property business (£0.45/mile for the first 10,000 miles and £0.25/mile thereafter). If this is claimed, then no other deduction can be made in respect of motor expenses.
 If a property is partly owner-occupied and partly let, expenses relating to periods of owner occupation are not allowable.

Question 32

When are capital allowances available on property income?

Answer 32

Only on plant and machinery used to repair or maintain a property

Question 33

What is domestic items replacement relief?

Answer 33

Landlord gets relief on cost of replacing domestic items but not the initial ones.

Question 34

Finance cost relief for property income calculation

Answer 34

20% of the lower of:
Finance costs this year and brought forward
Property income brought forward after losses
Adjusted total income

Cannot be used as a refund

Question 35

Property losses can be set against …

Answer 35

the first available future property income