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Flashcards in Income Tax Deck (20):

Income Taxx Computation

Trading income NSI SI DI Total
Employment Income
Bank Interest ( 100/80)
Dividends ( 100/90)
Property Income
REIT Inc ( 100/80)

Total income
Gifts of asset to charity/ qualifying loan interest

Net income
Personal allowance

Taxable Income

Taxable income


Income tax individuals chargesss

Income tax is chargeable on individuals and every individual is treated as a seperate taxable person.


Exempt income

Interest in National Savings certificates

New Individual Savings Accounts.

Betting, lottery and premium bond winnings.

4250 of gross annual rentssss-from letting!!


Income tax repayment interest..

Bank interest is 10/80
Debenture interest
Other Loan Interest
PPI compensation payments


Personal Allowance Reduction

By every £1 for every £2 over 100000 then it's stopped...


Child Benefit Tax Charge

The Child Benefit Rate is 1076 per year for the eldest child and 712 per year after that. Page..

Income tax charge applies if a taxpayer in receipt of child benefit with adjusted net income over 50,000 in tax year. The child benefit is reduced by £1 for every £100..


Child Benefit Q's.

First get the child benefit.
Then adjust the net income. For any gift aid.
Child benefit for two- 1076 + 712
Adjusted net income- 57589-400
Threshold (50,000)
Excess 7189
Divide 100


Employment Income..

Work out the total taxable Income.
Then calculate the tax rate bands.

Then subtract the tax deducted at source-
20% for interest

10% for dividends..



The second part of the Income Tax Computation

The first part is the taxable income.

Then you have the second part which works out the real amount of tax.


Income Tax Part Two

Income Tax computation
-following the income tax taxable income working out.

Income Tax

NSI 20 40 45
SI 0 to 5000 20 40 45..
Di @ 10 32.5 37.5

Less MCA @ 10

Income tax liable

Less tax credits deducted at source.

Di 10%


Income tax the different ones

First it's...

Then it's

Income Tax Liability

Then it's

Income Tax Payable



Total income chargeable to income tax is called Net Income...
Personal Allowance is then deducted from net income.


Net income

Net income less gross gift aid donations and personal pension conts...


Gift Aid-extends

the basic rate band and the higher rate...


Gifts of assets to charities

When you sell something to a charity at undervalue the deduction is calculated by

Market Value
Incidental costs of disposal


Amt the charity paid..


Reduction in the 100,000

When working the reduction in the personal allowance - the Gift Aid Donations!!!


Income Tax-interest payments.

If an individual takes out a loan for a qualifying purpose, the interest paid during the tax year is deductible from total income.


Child Benefit

When calculating the child benefit charge subtract the gross gift aid from the income.


Personal Age Allowance

The Personal Age Allowance applies to people who were born before 6 1938.

The Personal Age Allowance is 10660.

Reduce the PA by 1 for each 2 in excess of 27700..


Married Couples Personal - Older..

PAA for olde married couples...

If one of the married people is born before 6 April 1935.

If they got married before 5 December 2005 then the man claims it because people were sexist before !!!

After 5 Dec 2005 then highest!!!

The MCA for 15/16 is 8,355...

Minimum MCA is 3,220..

The spouse not entitled to claim the MCA may independently elect to claim half the ...


MCA and PAA and Child Q's.


Net income 28,000

Gift aid donation gross 5

27795 - 27700 = 95

95/2 = 47.5 - 46

10660 - 46 EQUALS 10612...


36170 - (27700) = 8470

8470 / 2 = 4235 hence person 10600.

Then the excess 4235 - 60 = 4175 hence..



When's doing the child's question's always remember to subtract the gross GIFT AID!!!