Income Tax + NIC Flashcards
(45 cards)
What to do if a donation is made outside of payroll?
Net donation x 100/80
Extend rate bands
What if a donation has been made via payroll?
Deduct from employment income.
Tax via payroll is calculated excluding that amount.
What is marriage allowance and how does it work?
A partner can elect to transfer £1,260 (10% rounded up) of their personal allowance if:
- The transferor has no tax or is basic rate band AFTER transfer
- The recipient is a basic tax rate payer.
Relief is given by reducing tax payable by 20% of the relief transferred.
What is the income limit before child benefit is paid back?
How is it calculated and how does it get added to income tax?
Which partner is liable?
£60,000
1% for every £200 between £60-£80k is paid back.
Amount is added to tax liability.
Partner with higher income.
What types of interest can be deducted from total income?
- Interest to buy plant & equipment for own business (for 3 years after loan taken out)
- To invest or lend to a partnership
- To pay inheritance tax
- To buy an interest in a company (with 5 or less shareholders). Tax payer must be director or own more than 5% shares.
When is qualifying interest and trading loss relief included in tax comp?
After total income and before personal allowance.
What basis is property income?
What if property income is less than £1,000?
Cash (unless elected, or income is over £150k).
Use property allowance of £1,000 instead of costs.
How to calculate replacement cost of property items?
Cost of replacement item (not including amounts that represent an improvement - unless technological advancement)
- Proceeds from old item
+ Cost of disposal
Treatment of interest expenses in property income?
What if it’s on a commercial property?
Interest is not allowable.
Relief is given as a tax reducer at 20% the lower of:
- Finance costs for the year
- Property income
- Adjusted total income (NS)
This CANNOT create a refund! Any finance cost not used are carried forward.
Interest on a commercial property is an allowable expense.
Treatment of property losses?
- Used against other property income
- Excess is c/fwd to use against property income ONLY!
What and how much is Rent a Room relief?
Rent a room relief is available to anyone who lets out part of their home (furnished!)
Relief is up to £7,500. If costs are higher, use that instead.
Treatment of pension contribution to a personal pension scheme by:
- Employee
- Employer
Employee - Extend the rate bands by contribution x (100/80)
Employer - exempt benefit
Treatment of pension contribution to an occupational pension scheme by:
- Employee
- Employer
Employee - pension deducted from salary. If it’s a contribution not deducted from salary, deduct from employment income.
Employer - exempt benefit
Maximum relief available for pension contribution?
Higher of:
£3,600
Employment income + trading profits
Tax treatment of receiving pension? (inc. lump sum)
Lump sum:
Tax free amount = 25% of sum
Taxable as NS income
Treatment of taxable benefits as a whole? (Availability and employee contribution)
Pro-rated for period benefit is available.
Deduct any contributions made by employee.
Taxable benefit for accommodation if:
- Employer owns the property
- Rented from 3rd party
- Is necessary for employment
Employer owns:
Annual value + (Cost - £75k) x 2.25%
Rented from 3rd party:
Higher of-
- Annual value
- Rent paid
Necessary:
Exempt benefit
Taxable benefit on cars for private use?
Limit on contribution?
What about on car insurance, repairs and tax etc?
List price - contribution x CO2 %
Contribution capped at £5k
Other car costs aren’t taxable benefit
Taxable benefit on private fuel?
What if diesel?
Contritbution?
£27,800 x CO2%
Extra % if diesel
No contribution can be made.
Difference on taxable benefit on diesel car?
Additional % added to CO2%
Is taxable benefit of private use of company van and fuel treated the same as cars?
No, fixed benefit for van and fuel in Hardman’s.
Examples of some benefits exempt from tax?
- Small gifts from employer under £50
- Staff entertaining under £150
- One phone
- Awards up to £5,000
- Removal expenses up to £8,000
- Parking space
- One health assessment a year
How is benefit via salary sacrifice calculated?
Charged at higher of:
- Salary sacrifice
- Value of the benefit received
Are benefits received via salary sacrifice taxable benefits?
Yes
Higher of:
- Salary sacrificed
- Value of benefit
