Personal Tax (UK Income Tax) Flashcards
6 cards from real AAT L4 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Personal Tax (UK Income Tax) flashcards as text
Class 1 National Insurance Contributions (primary) are paid by:
Answer: Employees on earnings between the primary threshold and upper earnings limit
Primary Class 1 NICs are paid by employees on earnings between the primary threshold (£12,570 p.a. in 2024/25) and the upper earnings limit (£50,270 p.a.), at 8% in 2024/25.
For 2024/25, the income tax rate on dividend income falling in the basic rate band (above the £500 dividend allowance) is:
Answer: 8.75%
The dividend tax rate for basic rate taxpayers is 8.75% from 2022/23 onwards (previously 7.5%). Higher rate taxpayers pay 33.75%; additional rate taxpayers pay 39.35%.
The UK savings income starting rate band of 0% (currently £5,000) applies when:
Answer: An individual's non-savings income is below the basic rate limit, allowing savings income to be taxed at 0% up to £5,000
The 0% starting rate for savings applies to savings income falling within the first £5,000 of the basic rate band, but only if an individual's non-savings income does not use up this starting rate band first.
Gift aid donations allow higher rate taxpayers to claim additional tax relief by:
Answer: Extending the basic rate band by the gross donation, reducing higher rate tax
Gift aid donations extend the basic rate band (and higher rate threshold) by the gross donation amount. Higher rate taxpayers pay 40% on income above the extended band instead of 40% within it — effectively getting 40% relief on their 20% cash donation (the charity claiming 20% basic rate).
Which of the following is a tax-allowable deduction for computing employment income?
Answer: Expenses incurred wholly, exclusively, and necessarily in the performance of the duties of employment
Deductions against employment income are very restricted: the 'wholly, exclusively, AND necessarily' test is the strictest in UK tax. Commuting, voluntary memberships, and everyday clothing all fail this test.
The rent-a-room scheme allows an individual to receive up to £7,500 per year tax-free from:
Answer: Letting furnished rooms in their own main residence
Rent-a-room relief exempts up to £7,500 per year of gross rental income from furnished letting of rooms in the landlord's main residence. If income exceeds £7,500, the individual can elect to use rent-a-room or the normal property income rules.