Topic 3 Flashcards
Income Tax
Every year in the Autumn, a number of taxation measures are made in the budget. These then take effect as a result of the related:
A. Income and Corporation Taxes Act
B. Social Security Act
C. Taxation Act
D. Finance Act
D. Finance Act
Marco is a resident of the UK and this is also the country in which he usually lives, although his country of domicile is Italy. On which one of the following would he not be expected to pay UK tax?
A. Income earned from renting his villa in Italy, but kept in an Italian bank
B. Income earned from renting his villa, but brought back to the UK
C. Tax on an inheritance left by his father in Italy
D. Tax on capital gains from the sale of some shares on the New York stock exchange
C. Tax on an inheritance left by his father in Italy
When does a person acquire their domicile of origin?
A. At birth
B. At 18
C. At 21
D. At 16
A. At birth
Which one of the following payments will NOT be liable to income tax?
A. Interest from a building society postal account
B. Income from company dividends
C. Interest from an Individual Savings Account
D. Income from Government loan stocks
C. Interest from an Individual Savings Account
Where an employee receives a termination payment on becoming redundant, up to what amount will the payment be free from income tax?
A. £20,000
B. £25,000
C. £30,000
D. £35,000
C. £30,000
Where a child receives an income from an arrangement made by his or her parents, how is this taxed?
A. As the child’s personal income
B. It is tax-free
C. The first £70 is always tax free
D. It will normally be added to the parent’s income
D. It will normally be added to the parent’s income
What does the term ‘collecting income tax at source’ actually mean?
A. Recipient pays the tax to the Inland Revenue before using the money
B. The tax is collected through the recipient’s tax return
C. The total income is automatically reduced by basic rate tax
D. The collection is from those who make the payment, not the recipient
D. The collection is from those who make the payment, not the recipient
For income tax purposes, self-employed people are taxed on their:
A. turnover
B. gross profit
C. net profit
D. personal drawings
C. net profit
Which one of the following individuals would be most likely considered a UK resident for tax purposes?
A. Sandra who normally lives in France but spends two months a year on a farm in Scotland.
B. Luigi who has a nine-month contract in Essex with a telecom company commencing in April.
C. Dmitri who has a seven-month business consultancy contract in London commencing in January.
D. Bella who spends 180 days a year in the UK developing her Italian based design company.
B. Luigi who has a nine-month contract in Essex with a telecom company commencing in April.
What is the tax liability of a higher rate taxpayer on income earned from dividends after their allowance has been used?
A. 32.5%
B. 20%
C. 40%
D. 22.5%
A. 32.5%
Terence is aged 38, married and has a gross salary of £26,500 from his employment. If he had no taxable benefits in kind, how much income tax did he pay?
A. £ 4,579.50
B. £ 4,814.00
C. £ 5,300.00
D. £ 2,800.00
D. £ 2,800.00
Steven (age 35) has a taxable income of £28,000. He receives NO other income of any sort during the tax year. As a single person, what is his tax liability?
A. £ 4,914
B. £ 5,600
C. £ 3,100
D. £ 5,195
B. £ 5,600
The profits of a sole trader are subject to which class of National Insurance contributions?
A. Class4
B. Class3
C. Class2
D. Class1
A. Class4
William is deemed to be resident in the UK for tax purposes in the previous tax year. What is the minimum number of days that he must have been in the UK in that tax year?
A. 1 day
B. 183 days
C. 90 days
D. 365 days
B. 183 days
The precise definition of employee expenses that are used to reduce income tax liabilities is they MUST be specifically incurred wholly:
A. while doing the job
B. and exclusively while doing the job
C. and necessarily while doing the job
D. exclusively and necessarily while doing the job
D. exclusively and necessarily while doing the job
