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Flashcards in Income Tax Deck (15)
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1

What order is your income taxed in?

-earnings/pension/rent
-bank account interest
-dividends
-chargeable gains

2

When doesn’t the £100+ interest from a children’s savings account not taxed on the adult

-if held in a JISA or CTF
- if given by grandparents, relatives or friends

3

What is the employment allowance

Most employer's are entitled to an employment allowance of £3k, this is deducted from the total secondary NIC bill. Not for companies where directors are sole employee of company, designed to promote employment

4

What can be deducted for interest on loans

-IHT bill
-machinery for partnership business
-purchase of shares in borrowers company
-partnership investment

The gross figure of interest paid in the tax year should be deducted in the tax computation. However, the amount of interest plus allowable business losses that can be deducted is capped at the higher of £50,000 or 25% of a person’s adjusted total income.
Adjusted total income is total income, with any charitable donations made through payroll giving being added back, and all types of pension payment being deducted.

5

What work benefits aren’t taxable

If an employer makes the following benefits available, they are generally tax free:
• group income protection (IP);
• provision of meals;
• mobile phones;
• long service awards;
• suggestion schemes;
• work-related training;
• relocation and removal expenses;
• home-working;
• workplace nurseries;
• liability insurance;
• pension advice;
• trivial benefits; and
• workplace charging of elect

6

To what dates can property income be drawn up

31 March or 5 april

7

Are EU people entitled to uk personal allowance

Yes if they have uk income taxable

8

Are company cars subject to NICs

Most fringe benefits are subject to employers’ NICs but not employees’ contributions. These are class 1A contributions. For example, company cars and private medical insurance provided by the employer are subject to class 1A NICs.

9

Deferment of NICs

It means where two salaries are being paid, you can opt to have one salary st 2% NIC (take away primary threshold first) and the other is based on the full rate

10

What don’t self employed people get which employed people do

Job seekers allowance, being replaced by universal credit

11

Explain entitlements for NIC 2 and 4 and what you get

Only class 2 contributions give entitlement to contributory State benefits, such as the new State Pension. Class 4 NICs do not provide any benefit so it is important to ensure that class 4 NICs are not paid unnecessarily.

12

Do you pay NIC 2 if non resident


Self-employed people are only liable to pay class 2 NICs if they are usually resident in the UK

13

How do you work out annual NICs

X 53 weeks. Mine rate of NICs is 50,000

14

When do class 2 NICs have to be paid by?

In two payments on account on 31 January in the tax year of assessment and 31 July following the end of the tax year of assessment, with a balancing payment or repayment on the following 31 January.

15

What is Annual Investment Allowance

£1m

Can’t use on cars

The Annual Investment Allowance (AIA) is a form of tax relief for British businesses that is designated for the purchase of business equipment. The AIA allows a business to deduct the total amount of qualifying capital expenditure up to a certain limit from its taxable profits in a given tax year. This allowance is earmarked for the purchase of business equipment, primarily tools and machinery.