Week 1 Flashcards
What taxes are there in the UK?
Income tax
Capital Gains tax
Inheritance tax
VAT
National insurance
Corporation tax
What is Tax avoidance?
A legal way of reducing tax
What is tax evasion?
An illegal way of paying less tax and deliberately misleading HMRC
What type of income is exempt from income tax?
ISAs (Individual Savings Account)
Winnings
National Saving certificates
What are the start and end dates of the tax year for individuals?
6 April - 5 April
What is another way of saying tax year for individuals?
Fiscal years
What are the start and end dates of the tax year for companies?
1 April - 31 March
What is another way of saying tax year for companies?
Financial years
When should a Self Assessment tax return be filed by? Both on paper and electronically
31 October 2025 (on paper)
31 January 2026 (electronically)
What are the different classifications of income?
Employment
Property Income
Trading Income
Interest
Dividends
What types of income are exempt from income tax?
ISAs
Income from National Savings Certificates
Minor benefits provided to employees
Premium Bond prizes and betting winnings
What is the basic, higher and additional rate tax for year 2024-25? (Money)
Basic rate - £37,700
Higher rate - £87,440
Additional rate - £125,140
What are the UK income tax rates for non-savings income?
Basic rate - 20%
Higher rate - 40%
Additional rate - 45%
How is savings income taxed in the UK?
Starting rate - 0% on the first £5000
Higher rate - £500
Additional rate - £0
All on PSA (personal savings allowance)
How is dividend income taxed in the UK?
First £500 - 0%
Basic rate - 8.75%
Higher rate - 33.75%
Additional rate - 39.35%
For 2024-25, how much is the PA (personal allowance)?
£12,570 if income is under £100,000
What happens to the PA if income exceeds £100,000?
For every £2 over £100,000, £1 of the personal allowance is gone. For example:
1. Income £110,000
2. £10,000/2 = £5000
3. £12,570 - £5000 = £7570
£7570 is the new PA
What is the Personal Savings Allowance (PSA) in 2024-25?
£1000 if income is less than £37,700
£500 if higher than £37,700
£0 if higher than £125,140
How much dividend allowance are taxpayers entitled to and what rate is it taxed at?
£500 at 0%
How are Gift Aid donations treated for tax purposes?
(Gift Aid donation x 100/80)
