Income Tax Computation

Question 1

income tax pro forma headings?

Answer 1

ns, s, d, total

Question 2

income tax pro forma?

Answer 2

trading income xxx
employment income xxx
bank interest xxx
dividends xxx
property income xxx

less:
reliefs (xxx)

equals: net income xxx

less: personal allowance (xxx)

equals taxable income (xxx)

Question 3

PA?

Answer 3

12,570

Question 4

PA if income exceeds 100,000?

Answer 4

reduced by £1 for every £2 in excess of 100,000

Question 5

adjusted net income?

Answer 5

net income less gross gift aid less gross pension

Question 6

adjusted net income calculation?

Answer 6

net income - gross gift aid - gross pension

Question 7

what is adjusted net income used for?

Answer 7

calculating PA

Question 8

dividend allowance?

Answer 8

500

Question 9

tax rates for dividends?

Answer 9

8.75% BRB
33.75% HRB
39.35% ARB

Question 10

what is the threshold for the BRB, HRB & ARB

Answer 10

the first 37,700 is taxed at 20%

everything between 37,700 and 125,140 is taxed at 40%

everything above 125,140 is taxed at 45%

Question 11

how do gifts of assets to charities work?

Answer 11

can deduct the gift to charity

Question 12

computation for gifts of assets to charity?

Answer 12

market value xxx
incidental costs of disposal xxx
less: amount paid by charity (xxx)

equals: allowable deduction xxx

Question 13

qualifying shares?

Answer 13

include shares/securities listed on a recognised exchange

AIM or listed plc

Question 14

payroll giving scheme?

Answer 14

charitable donations under an approved scheme are deductible from employment income

Question 15

qualifying interest payments?

Answer 15

interest paid on a qualifying loan is deductible from total income

Question 16

qualifying loans include…

Answer 16

• loans to buy p&m for use in partnership/employment
• loans to buy interest in a close corp
• loans to pay IHT
• loans to invest in partnership

Question 17

restriction on reliefs against total income?

Answer 17

reliefs are subject to a cap at the higher of:
- 50,000
- 25% of adjusted total income

Question 18

is adjusted total income and adjusted net income the same thing?

Answer 18

no

Question 19

adjusted total income?

Answer 19

total income + payroll giving - gross personal pension contributions

Question 20

are spouses taxed separately?

Answer 20

yes

Question 21

if property is owned jointly…

Answer 21

income from the asset is split equally

Question 22

property includes…

Answer 22

• shares
• buildings
• bank accounts

Question 23

child benefit tax charge?

Answer 23

IT charge applies if a taxpayer or their partner receives child benefit and one of them has adjusted net income over 60,000

Question 24

how is the child benefit charge calculated?

Answer 24

use adjusted net income of the partner with the higher ANI and add it to their IT liability

Question 25

what is the child benefit charge?

Answer 25

charge is 1% of child benefit received for every £200 of ANI between 60,000 and 80,000

Question 26

what is the rate of child benefit?

Answer 26

£25.60 per week for eldest qualifying child £16.95 per week for each other qualifying child

Question 27

if both partners have ANI below 60,000, does child benefit charge apply?

Answer 27

no