AAT L4 Personal Tax (UK Income Tax) 5

Question 1

National Insurance Class 4 contributions are paid by self-employed individuals on trading profits. For 2024/25, the main rate on profits between the lower and upper profits limits is:

Accepted Answer

6%

Answer

Class 4 NIC main rate was reduced to 8% from April 2024 and further reduced to 6% in later changes. Note rates are subject to change — check the applicable year. For 2024/25 the rate is 6%.

Question 2

Which of the following is exempt from UK income tax?

Accepted Answer

Winnings from the National Lottery

Answer

Lottery and gambling winnings are exempt from UK income tax. Bank interest, rental income, and employment income (including overtime) are all taxable sources of income.

Question 3

An employee's P60 is used to:

Accepted Answer

Provide a year-end summary of total pay and tax deducted under PAYE, required by the employee for self-assessment

Answer

The P60 is an annual summary provided by the employer to each employee, showing total earnings and PAYE income tax and NIC deducted in the tax year — used by employees to complete self-assessment returns and to check PAYE deductions.

Question 4

Which of the following savings income is exempt from UK income tax?

Accepted Answer

Interest from a cash ISA

Answer

Interest earned within an Individual Savings Account (ISA) is exempt from UK income tax regardless of the amount or the individual's tax rate. All other forms of savings interest are taxable (though the personal savings allowance may cover some).

Question 5

For income tax, the additional rate (45%) applies to taxable income above:

Accepted Answer

£125,140

Answer

The additional rate of 45% applies to non-savings taxable income above £125,140 (from 2023/24 onwards, reduced from £150,000). At £125,140, the personal allowance is also fully withdrawn.

AAT Level 4 Practice Test

AAT Level 4 Practice Test

AAT L4 Personal Tax (UK Income Tax) 5