Unit 1 Topic 3 Flashcards
Which of the following is not assessable for income purposes?
- Tips
- Interest from bank and building society deposits
- Lottery prizes
- Rents from land and property
- Lottery prizes
A person who is UK resident for tax purposes only pays income tax on earning generated in the UK. True or false?
False (anywhere in the world)
A person may become UK domiciled once they have been settled in the UK for a number of years. True or false?
True
In what order of priority is income taxed?
Non savings income
Savings income
Dividend income
Blind persons allowance can be transferred to a spouse or a civil partner of the blind person does not use the allowance. True or false
True
Emma worked abroad for five years but is now back working in the UK. What class of insurance contributions could she pay to improve her contribution record for state pension?
Class 3
Mike earns £22,000. He also receives £500 interest on his savings from a building society deposit account. Calculate the income tax payable.
a) £0
b) £1,886
c) £2,386
d) £4,400
b) £1,886
Roopa is a company director. In the current tax year, she draws a salary of £12,570. She has dividend income of £27,000. Calculate the income tax payable.
a) £0
b) £2,318.75
c) £3,457.50
d) £6,750
b) £2,318.75
Jemma is self-employed and is in receipt of blind person’s allowance of £3,070. In the current tax year, her gross profit is £20,000 and she has allowable expenses of £2,500. She has to pay Class 4 NICs at 6 per cent on her taxable profit above £12,570. Calculate the income tax payable.
a) £0
b) £3,500
c) £1,045.80
d) £372
d) £372
Ashok’s salary is £75,000 and he is paid savings interest of £650. He also has dividend income of £7,000. Calculate the income tax payable.
a) £0
b) £17,432
c) £19,685.75
d) £30,000
c) £19,685.75
For Capital Gains Tax (CGT) purposes, in which tax year must any profit typically be present?
(A) The tax year ending on 5th April.
(B) The tax year running from 6th April to 5th April in the next year
(C) The calendar year.
(D) Any tax year the individual chooses.
(B) The tax year running from 6th April to 5th April in the next year
What is one of the conditions for being considered “resident” in the UK for tax purposes?
(A) Owning property abroad.
(B) Having family living outside the UK.
(C) Spending at least 183 days in the UK in a given tax year
(D) Holding a UK bank account.
(C) Spending at least 183 days in the UK in a given tax year
What is “domicile” generally related to?
(A) The country where an individual spends the most time each year.
(B) The country that an individual treats as their permanent home
(C) The country of an individual’s current citizenship.
(D) The country where an individual pays the most tax.
(B) The country that an individual treats as their permanent home
What is a main source of government revenue?
(A) Charitable donations.
(B) Taxable income
(C) Profits from state-owned businesses.
(D) International aid.
(B) Taxable income
Which of the following is generally considered income assessable to tax?
(A) Interest on ISAs (in most circumstances).
(B) Proceeds from a qualifying life assurance policy.
(C) Salary/wages from employment
(D) Certain gifts from an employer.
(C) Salary/wages from employment
Are redundancy payments always fully taxable?
(A) Yes, all redundancy payments are fully taxable.
(B) No, there is a threshold, and only the excess above it is assessable
(C) Only redundancy payments above a very high limit are taxable.
(D) Redundancy payments are never taxable.
(B) No, there is a threshold, and only the excess above it is assessable
When are changes to income tax bands and rates typically announced?
(A) At the start of each tax year.
(B) In the subsequent Finance Act
(C) Quarterly, in government economic updates.
(D) Whenever the government deems necessary.
(B) In the subsequent Finance Act
What was the basic rate of income tax for most of the UK until the end of the 2027/28 tax year?
(A) 10%
(B) 15%
(C) 20%
(D) 40%
(C) 20%
How is income tax collected at source?
(A) Directly from the recipient of the income.
(B) By the recipient claiming it back after receiving the income.
(C) From the person who makes the payment, not the recipient
(D) Through an annual self-assessment tax return.
(C) From the person who makes the payment, not the recipient
How do self-employed individuals pay their income tax?
(A) Through monthly deductions from their business income.
(B) Directly to HMRC on the basis of a declaration of net profits
(C) At the same rate and time as employed individuals.
(D) Through their business partners.
(B) Directly to HMRC on the basis of a declaration of net profits
How can making gifts to charity affect an individual’s income tax liability?
(A) It always increases income tax liability.
(B) It has no impact on income tax liability.
(C) It can reduce an individual’s income tax liability
(D) It only affects Capital Gains Tax.
(C) It can reduce an individual’s income tax liability
For whom are Class 2 National Insurance Contributions mandatory?
(A) Employees earning above a certain threshold.
(B) The self-employed
(C) Voluntary contributors seeking state benefits.
(D) Individuals with investment income.
(B) The self-employed
