Taxation Topic 2 - Income Tax Flashcards
What is the UK tax system used to do
raise revenue, control inflation and encourage savings
What is published every year following the budget
A finance bill
What is a finance bill
publication stating the new taxation proposals made in the budget, once passed by parliament it can receive royal assent (where monarchy accepts the implication of this bill) and only then will become a finance act
Usually, how often are finance acts published
Every year
What are the 5 main sources of income
- Employment
- Trading (self-employment)
- Pension
- Income from property
- Income from savings and investments (dividends included)
Married couples can transfer 10% of their personal allowance for income tax as long as…
the recipient is not in the higher or additional tax band.
What happens to your personal allowance when you earn above £100k a year
Personal allowance is deducted by £1 for every £2 earned, , so anyone earning £125,140 or above (assuming the personal allowance is £12,570) will have no personal allowance left and will be taxed on all of their income.
What is the amount for Blind person’s allowance and can it be transferred
Yes it can be transferred, and the allowance is £2600 on top of your personal allowance
What 3 main deductions can be made to somebody’s gross salary before tax is calculated
- Pension contributions
- Charitable donations
- Allowable expenses (self-employed tax relief etc.)
If income tax rates are changed, what will this be shown in
The finance act
With Scottish income tax, what can the Scottish parliament control
Rates and bands for income, but the rates and bands do not apply to savings or dividends
What control does the welsh gov. have over their income tax
The UK gov. deducted 10p from the income tax rate paid by the Welsh, and the Welsh gov. can then decide how much to top it up by.
What are the personal savings allowance brackets
£1k for basic rate taxpayers and £500 for higher-rate payers, additional receive no allowance.
What is the starting rate band and hwo much is it
A starting rate band is also applied to anyone earning under the personal allowance band (£12,570) and this current starting rate is £5k.
What happens to your starting band if you begin to earn more than the personal allowance
for every £1 over the personal allowance, £1 is taken off the starting rate band.