R03 Part 1 Week 1

Question 2

What is Income Tax?

Answer 2

An annual, direct, and progressive tax on income, calculated based on earnings throughout the tax year.

Question 3

What are the main categories of income for tax purposes?

Answer 3

Earned (non-savings), Savings, Dividend, and Chargeable Gains.

Question 4

What is the order of applying income tax?

Answer 4

1. Earned income
2. Savings income
3. Dividend income
4. Chargeable gains

Question 5

What are the 10 steps to calculate income tax?

Answer 5

1. Identify income types
2. Add savings income
3. Add dividends
4. Add chargeable gains
5. Deduct allowable deductions
6. Deduct personal allowance
7. Extend tax bands (if applicable)
8. Apply tax rates
9. Deduct tax reducers
10. Add tax already deducted at source

Question 6

What is the personal allowance for 2024/25?

Answer 6

£12,570

Question 7

When is the personal allowance reduced?

Answer 7

When adjusted net income exceeds £100,000 (£1 reduction for every £2 over).

Question 8

What is the personal savings allowance?

Answer 8

£1,000 for basic rate, £500 for higher rate, £0 for additional rate taxpayers.

Question 9

What is the dividend allowance for 2024/25?

Answer 9

£500

Question 10

How is the benefit in kind for company cars calculated?

Answer 10

List price × % based on CO2 emissions, minus any employee contributions.

Question 11

What is the fuel benefit charge based on?

Answer 11

£27,800 × % based on CO2 emissions.

Question 12

What is the transferable personal allowance (Marriage Allowance)?

Answer 12

Up to £1,260 can be transferred to a basic rate tax-paying spouse.

Question 13

What is the Blind Person’s Allowance for 2024/25?

Answer 13

£3,070

Question 14

When does the High Income Child Benefit Charge apply?

Answer 14

When adjusted net income exceeds £60,000.

Question 15

How is the High Income Child Benefit Charge calculated?

Answer 15

0.5% of benefit for every £100 over £60,000.

Question 16

What are the main classes of National Insurance Contributions (NICs)?

Answer 16

Class 1: Employees & Employers
Class 2: Self-employed (voluntary from 2024/25)
Class 3: Voluntary
Class 4: Self-employed (based on profits)

Question 17

What is the Class 1 employee NIC rate for 2024/25?

Answer 17

8% on earnings £12,570–£50,270, 2% above that.

Question 18

What is the Class 4 NIC rate for 2024/25?

Answer 18

6% on profits £12,570–£50,270, 2% above that.