ICAEW Principles of Tax Exam With Complete Solutions
When is a full tax return submitted? - Answer - if you are a Director of a company
- a sole trader and your turnover is greater than $85,000
- if you want to
When should HMRC be notified of chargability? - Answer 5th October following the end
of the tax year, i.e. After the next April - via the penalties section of the tax return
Personal self assessment tax return submission dates - Answer in the tax tables
How long can HMRC amend errors in a return - Answer 9 months from when it was filed
How long can a tax-payer amend their return? - Answer 12 months after the due date i.e.
31st Jan after tax year or 3 months after return requested.
How is a payment on account calculated and when are they paid? - Answer Each
payment is half of the previous year's income tax and Class 4 NIC (excluding PAYE).
Interim payment dates in tax tables.
What is an extra-statutory concession? - Answer a relaxation of legal position to resolve
anomalies and relieve hardship - not an official source of tax law
What is exempt from income tax? - Answer Income from; National Savings Certificates,
ISAs, Winnings, some benefits, Redundancy pay, Scholarships, interest from overpaying
tax, qualifying compensation payments
What comes under Non-Savings income? - Answer Employment income (inc pension and
benefits), trading profits, property income)
Difference between net income and taxable income - Answer Net income is BEFORE
, personal allowance is accounted for, taxable income is AFTER
When does the personal allowance reduce? - Answer _£1 personal allowance deducted
for every _£2 earned over _£100,000 - so reduced to nil at _£125,000
Income tax liability is calculated in what sequence? - Answer Personal allowance,
non-savings, savings, dividends
What is the saving starting rate band? - Answer 0% tax on any savings income in the first
_£5000 of total income
Savings income nil rate band - Answer A percentage of the savings income at 0% based
on level of income. £1000/£500/£0 = basic rate/higher rate/additional rate.
Dividend nil rate band - Answer First £2000 of dividend income is at 0% regardless of
taxpayer's rate. Then special %s for bands of income, in tax tables.
Order to perform an income tax computation - Solution 1. Subtract personal allowance if
not already
2. Add non-savings basic rate
3. Add savings starting rate band
4. Add savings income nil rate band
5. Add any other savings income
6. Add dividends income nil rate band
7. Add any other dividends income
How to arrive at tax payable/repayable from the tax liability - Solution Less any tax
already deducted at source - commonly PAYE
How to provide for Gift Aid donations in income tax computations - Solution 1. Multiply
the gross donation by x1.25 the amount that has to be earned to give the donation after
PAYE.
When is a full tax return submitted? - Answer - if you are a Director of a company
- a sole trader and your turnover is greater than $85,000
- if you want to
When should HMRC be notified of chargability? - Answer 5th October following the end
of the tax year, i.e. After the next April - via the penalties section of the tax return
Personal self assessment tax return submission dates - Answer in the tax tables
How long can HMRC amend errors in a return - Answer 9 months from when it was filed
How long can a tax-payer amend their return? - Answer 12 months after the due date i.e.
31st Jan after tax year or 3 months after return requested.
How is a payment on account calculated and when are they paid? - Answer Each
payment is half of the previous year's income tax and Class 4 NIC (excluding PAYE).
Interim payment dates in tax tables.
What is an extra-statutory concession? - Answer a relaxation of legal position to resolve
anomalies and relieve hardship - not an official source of tax law
What is exempt from income tax? - Answer Income from; National Savings Certificates,
ISAs, Winnings, some benefits, Redundancy pay, Scholarships, interest from overpaying
tax, qualifying compensation payments
What comes under Non-Savings income? - Answer Employment income (inc pension and
benefits), trading profits, property income)
Difference between net income and taxable income - Answer Net income is BEFORE
, personal allowance is accounted for, taxable income is AFTER
When does the personal allowance reduce? - Answer _£1 personal allowance deducted
for every _£2 earned over _£100,000 - so reduced to nil at _£125,000
Income tax liability is calculated in what sequence? - Answer Personal allowance,
non-savings, savings, dividends
What is the saving starting rate band? - Answer 0% tax on any savings income in the first
_£5000 of total income
Savings income nil rate band - Answer A percentage of the savings income at 0% based
on level of income. £1000/£500/£0 = basic rate/higher rate/additional rate.
Dividend nil rate band - Answer First £2000 of dividend income is at 0% regardless of
taxpayer's rate. Then special %s for bands of income, in tax tables.
Order to perform an income tax computation - Solution 1. Subtract personal allowance if
not already
2. Add non-savings basic rate
3. Add savings starting rate band
4. Add savings income nil rate band
5. Add any other savings income
6. Add dividends income nil rate band
7. Add any other dividends income
How to arrive at tax payable/repayable from the tax liability - Solution Less any tax
already deducted at source - commonly PAYE
How to provide for Gift Aid donations in income tax computations - Solution 1. Multiply
the gross donation by x1.25 the amount that has to be earned to give the donation after
PAYE.
