Income tax Flashcards
(22 cards)
What goes into the income tax computation?
- employment income (W)
- trading income (W)
- property income
- interest
- dividends
- pension
- trading losses/reliefs
to come to net income
less: personal allowance
to reach taxable income
Employment income (W)
Employee: cash and ‘cash value’ of benefits from employment; class 1 NI
Trading income (W)
sole trader/partner: trading profits from business; class 4 NI
cash basis is default method from 24/25
trading allowance £1,000 (no expenses deductible)
Property income
cash basis is default method if income less than or equal to 150,000
deduction for replacement items, not enhancement
rent-a-room relief 7,500 (no expenses deductible)
property allowance 1,000 (no expenses deductible)
Interest
exempt: ISA, NSC, IT repayment
Dividends
Exempt: ISA
Pension
Pensioner: income from pension
Trading losses/reliefs
CY/PY trading loss claim
charity gifts of assets
interest on loan for: close company share purchase; assets for partnership/employment; IHT payment
net income
over 100,000 (after deducting gross personal pension contributions and gift aid) = taper PA
over 60,000 = child benefit charge
personal allowance
12,570, additional 3,070 for blind people
taxable income
exempt: prize winnings, most benefits, scholarship
SRB @ 0%
5,000, only available if non-savings is less than 5,000
PSA @ 0%
1,000 - BRB
500 - HRB
0 - ARB
DA @ 0%
500
BRB @ 20%
increase band for gross amount of:
personal pension contributions
gift aid
HRB @ 40%
increase band for gross amount of:
personal pension contributions
gift aid
tax on transition profits
sole trader/partner basis period transition
tax reducers
finance costs on residential property (20% of interest/property income/taxable income)
marriage allowance (transfer 1,260 of PA if partner taxed at BRB)
tax increasers
child benefit charge (1% of CB for every 200 that income is above 60,000)
DTR
lower of:
UK tax
foreign tax
tax already paid
PAYE/tax witheld on pension income
