week 2 personal allowance & gift aid

Question 1

when is personal allowance reduced to 0

Answer 1

The PA is reduced to zero if adjusted net income is £125,140 or more.

Question 2

what happens If a taxpayer’s “adjusted net income” is above £100,000,

Answer 2

If a taxpayer’s “adjusted net income” is above £100,000, the personal allowance is reduced at the rate of £1 for every £2 by which adjusted net income exceeds £100,000.

Question 3

what is adjusted net income

Answer 3

Adjusted net income is equal to net income (i.e. total income less tax reliefs) less the grossed-up amount of any Gift Aid donations and personal pension contributions made during the year.