Computing Income Tax Liability and Income Tax Payable (Essential Reading) Flashcards
Step 1 in calculating income tax liability and income tax payable?
Prepare column for non-savings income, savings income and dividend income
Step 2 in calculating income tax liability and income tax payable?
Deal with non-savings income first
Step 3 in calculating income tax liability and income tax payable?
Now deal with savings income
Step 4 in calculating income tax liability and income tax payable?
Tax dividend income
Step 5 in calculating income tax liability and income tax payable?
Add amounts of tax together
Step 6 in calculating income tax liability and income tax payable?
Once tax has been computed, deduct any available tax reducers
Step 7 in calculating income tax liability and income tax payable?
Calculate amount of any child benefit income tax charge and pension annual allowance charge
Step 8 in calculating income tax liability and income tax payable?
Deduct tax paid udner PAYE
An individual who pays interest on a loan in a tax year?
Entitled to relief in that tax year
What must loan be for individual who is entitled to tax relief? (partnership)
Loan to buy plant or machinery for partnership use
What must loan be for individual who is entitled to tax relief? (employemnt)
Loan to buy plant or machinery for employment use
What must loan be for individual who is entitled to tax relief? (partnership)
Loan to invest in a partnership
What must loan be for individual who is entitled to tax relief? (employee-controlled)
Loan to buy interest in employee-controlled company
What must loan be for individual who is entitled to tax relief? (co-operative)
Loan to invest in a co-operative
How is tax relief given?
It is deducted from non-savings income first, then savings income and lastly from dividend income
