Taxable income Flashcards
Proforma income tax computation Completing taxable income Personal allowance Income over £100,000 personal allowance restriction Tax planning
What is Non-savings income?
Non-savings income is any income with the exception of interest and dividends.
What are the main sources of Non-savings income
- Trading income
- Employment income
- Property income
What is the personal allowance?
The personal allowance is tax-free income which is given to all individuals (including
children).
How is the personal allowance deducted?
The order is normally:
(1) Non-savings income
(2) Savings income
(3) Dividend income
What is the personal allowance restriction?
When an individuals adjusted net income exceeds £100,000 the personal allowance is restricted.
How do you calculate the personal allowance restriction?
New personal allowance = (Adjusted net income - £100,000) * 0.50
How do you calculate the adjusted net income?
Total income
Less:
- gift aid payments (gross* 80%)
- personal pension contributions (gross)
