Topic 3 - Taxation 1 Flashcards
For a child, which of the following would be subject to income tax?
A. All earned income
B. Any educational grant.
C. Any earned income that exceeds their personal allowance.
D. A settlement from their parents
C. Any earned income that exceeds their personal allowance.
What is the 4 stage calculation of personal liability to income tax
- Work out total income
- Make appropriate deductions, eg allowable expenses or pension contributions.
- Deduct the personal allowance and other reliefs (blind persons allowance) to arrive at the taxable income.
- Apply tax at the current rates to the appropriate bands of income.
What order of priority is income taxed at.
- Non savings income.
- Savings income.
- Dividends
- Chargeable gains on a non qualifying life assurance.
True or false
A person who is a uk resident for tax purposes only pays income tax on earnings generated in the uk.
False
True or false
A person may become uk domiciled once they have been settled in the country for a number of years.
True
Which of the following is not assessable for income tax purposes?
1. Tips.
2. Interest from bank and building society deposits.
3. Lottery prizes.
4. Rents from land and property.
- lottery prizes
In what order of priority is income taxed?
- Non savings income
- Savings income
- Dividend income
- Chargeable gains on a non qualifying life assurance.
True or false
Blind persons allowance can be transferred to a spouse or civil partner if the blind person does no use the allownace,
True
Emma worked abroad for 5 years but is now back working in the uk. What class of national insurance contributions could she pay to improve her contribution record for the state pension?
Class 3
Volunatry and can be used by people who have worked abroad.
What is class 1 national insurance?
Paid by employees at a percentage of earnings.
Paid by employers on most employees earnings above a lower limit.
What is class 2 national insurance?
Flat rate contributions paid by self employed.
Quoted as a weekly amount.
Collected through self assessment.
What is class 3 national insurance?
Voluntary contributions that can be paid by people who would otherwise not be entitled to a full pension.
Can occur if a person has taken a career break or spent some time working overseas.
They are a flat rate contribution.
What is class 4 national insurance?
Additional contributions paid by self employed on their annual profits between a specified minimum and maximum level.
Paid to HMRC in half yearly instalments by self assessment
