Corporation tax payment date

Taxable total profits

Exempt ABGH distributions

Augmented profits

Corporation tax due date for Y/E 31 /03/2025 is

LOs 5 b, 5c, 5d
Total: 1 0 marks

3 Bryn Ltd
3.1 Bryn Ltd, a n unquoted trading company, prepares accounts to 30 September and has one associated company. The
draft accounting profits for the year e n d e d 30 September 2023 are £890,000. The following items have been a d d e d
o r deducted in arriving at the draft accounting profit:

Note £
Depreciation 45,500

Loa n i nte re st paya b Ie 1 9,000

Qualifying donation 2 8,000

Exem pt dividends rece i ve d 3 27, 000

Bank interest receivable 4,200

Profit o n disposal of asset 5,500

Gift of stock to charity 1 ,000

Notes
1 Interest payable o n a loan to service working capital.
2 The qualifying donation of £8,000 in the accounts comprises £1,600 paid during the accounting period and a n
accrual of £6,400 that the company had agreed to pay but was not paid until 22 December 2023.
3 Exempt dividends received from unrelated UK companies.
In addition, the following item has not yet been included in the accounts:
• Gifts of one bottle of wine costing £10 to each of 3 0 employees and each of 22 clients.
Requirement
Using the standard format below, compute Bryn Ltd's taxable total profits for the year ended 30 September 2023.
You should enter a number in each relevant box. If an amount is not taxable o r n o adjustment is required you must
enter a zero or a dash into the relevant box.
(8 marks)
Bryn Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Dividends

Qualifying donation

Taxable total profits

 WORKING
Trading income

Draft accounting profits

Depreciation

Loa n i nte re st paya b Ie

Qualifying donation

Exempt dividends received

Bank interest receivable

Profit ondisposal

Gift of stock ___________

Gifts of wine

Trading income

3.2 In the year ended 30 September 2024 Bryn Ltd expects taxable total profits of £980,900 a n d is expected to receive
exempt dividends of £40,000 from unrelated UK companies and £10,000 from an unrelated Spanish company.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should be paid in relation to the
year ended 30 September 2024. Input the date in the format DD/MM/YYYY (eg, 03/04/2023 for 3 April 2023).
(2 marks)
Corporation tax payment date

Taxable total profits

Exempt ABGH distributions

Augmented profits

Corporation tax due date for Y/E 30/09/2024 is

LOs 5 b, 5c, 5 d
Total: 1 0 marks

4 Lundy Ltd
4.1 Lundy Ltd, an unquoted trading company, prepares accounts to 31 March and has n o associated companies. The
draft accounting profits for the year e n d e d 31 March 2024 are £2,860,000. The following items have been added o r
deducted i n arriving at the draft accounting profit:

Note £
Depreciation 148,700

Loan interest payable 1 3,800

Property income 2 25,000

Exempt dividends received 3 9,000

Bank interest receivable 7,000

 Staff party for 1 00 staff 10,000

Gifts of pens to customers 4 8,000

Notes
1 Interest payable on a loan to buy an investment property.
2 Property income relates to an investment property which was rented o u t to a n unrelated company from 1 October
2023 for £5,000 per month payable in advance. The tenant paid the rent for March 2024 late on 3 April 2024.
3 Exempt dividends of £6,000 received from unrelated UK companies and £3,000 received from an unrelated
Italian company.
4 The pens cost £10 each a n d had the company l o g o printed o n them.
In addition, the following item has not yet been included in the accounts:
• During the accounting period, legal fees of £4,300 were incurred, of which £4,000 related to the investment
property purchase and £300 related to debt collection in respect of trade customers.

Requirement
Using the standard format below, compute Lundy Ltd's taxable total profits for the year e n d e d 31 March 2024. You
should enter a number in each relevant box. If an amount is not taxable o r n o adjustment is required you must enter
a zero or a dash into the relevant box.
(8 marks)
Lundy Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Dividends

Property income

Taxable total profits

WORKING
Trading income

Draft accounting profits

Depreciation

Loan interest payable

Property income

Exempt dividends received

Bank interest receivable

Staff party

Gift of pens

Legal fees

Trading income

4.2 In the year ended 31 March 2025 Lundy Ltd expects taxable total profits of £3,1 00,000 and is expected to receive
the same amount of dividends as in the year ended 31 March 2024.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should be paid in relation to the
year e n d e d 31 March 2025. Input the date in the format DD/MM/YYYY (eg, 03/04/2023 for 3 April 2023).
(2 marks)
 Corporation tax payment date

Taxable total profits

Exempt ABGH distributions

Augmented profits

Corporation tax due date for Y/E 31/03/2025 is

LOs 5b, 5c, 5d
Total:10 marks

5 Budding Ltd
5.1 Budding Ltd, an unquoted trading company, prepares accounts to 31 Marchand has no associated companies. The
draft account ng profits for the year ended 31 March 2024 are £165,000. The following items have been added or
deducted in arriving at the draft accounting profit:

Note £
Depreciation 13,200
Bonuses 1 25,000
Qualifying donation 2 10,000
Exempt dividends received 3 6,750
Bank interest receivable 8,000
Employee parking fines 4 200
Employer's national insurance contributions 3,450

Notes
1 Bonuses totalling £25,000 were paid in respect of this period on 2 February 2025. These were the first bonuses
paid by the company.
2 The qualifying donation of £10,000 in the accounts comprises £8,300 paid during the accounting period and an
accrual of £1,700 that the company had agreed to pay but was not paid until 10 June 2024.
3 Exempt dividends received from unrelated UK companies.
4 The parking fines were incurred by the employees whilst they were on business trips.
In addition, the following item has not yet been included in the accounts:
• Legal fees in relation to an issue of share capital (£1,750) and in relation to new employment contracts (£1,800).
Requirement
Using the standard format below, compute Budding Ltd's taxable total profits for the year ended 31 March 2024.
You should enter a number in each relevant box. If an amount is not taxable or no adjustment is required you must
enter a zero or a dash into the relevant box.
(8 marks)
Budding Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Dividends

Qualifying donation

Taxable total profits

 WORKING
Trading income

Draft accounting profits

Depreciation

Bonuses

Qualifying donation

Exempt dividends received

Bank interest receivable

Employee parking fines

Employer national insurance contributions

Legal fees

Trading income

5.2 Assume that Budding Ltd has taxable total profits of £400,000 and has not received any dividends in the eight
months e n d e d 30 November 2024.
Requirement
State:
• the profits limit for the eight months ended 30 November 2024, that is used to determine whether Budding Ltd
must pay corporation tax by instalments; and
• the first date by which any corporation tax should be paid in relation to the eight months ended 30 November
2024. Input the date in the format DD/MM/YYYY(eg, 03/04/2023 for 3 April 2023).
(2 marks)
Corporation tax limit and payment date

The profits limit is

First payment of corporation tax due date

LOs 5 b, 5c, 5 d
Total: 1 0 marks

6 Pedestal Ltd
6.1 Pedestal Ltd, an unquoted trading company, prepares accounts to 31 December a n d has n o associated companies.
The draft accounting profits for the six months ended 31 December 2023 are £1,873,000.
The following items have been a d d e d or deducted in arriving at the draft accounting profit:

Note £

Depreciation 80,900

HMRC interest payable 1 150

HMRC penalty 1 2,000

Donation 2 10,000

Client entertaining 6,300

Bank interest receivable 7,200

Loss o n disposal of asset 3,300

Notes
1 HMRC interest was paid in respect of late corporation tax for the accounting period for the year e n d e d 30 June
2022. A penalty of £2,000 was also charged.
2 The donation of £10,000 paid during the accounting period related to a national registered charity (£8,000) and a
political party (£2,000).
In addition, the following items have not yet been included i n the accounts:
• The company issued £50,000 of debenture loan stock to fund the launch of a new product. The interest payable
in respect of the loan stock was £2,500 for the six months ended 31 December 2023, and the company incurred
legal fees i n respect of the loan stock issue of £1,300.
• The company spent the following o n its head office:

£
Extension 1 8,000
Redecoration 5,000

Requirement
Using the standard format below, compute Pedestal Ltd's taxable total profits for the six months e n d e d 31
December 2023.
You should enter a number in each relevant box. If an amount is not taxable o r n o adjustment is required you must
enter a zero or a dash into the relevant box.
(8 marks)
Pedestal Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Qualifying donation

Taxable total profits

WORKING
Trading income

Draft accounting profits

Depreciation

HMRC interest payable

HMRC penalty

Donation

Client entertaining

Bank interest receivable

Loss o n disposal

Loan stock

Extension

Redecoration

Trading income
 6.2 In the year ended 31 December 2024 Pedestal Ltd expects taxable total profits of £1,940,000 and is expected to
receive £6,000 in dividends from unrelated UK companies and £1,000 from an unrelated USA company.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should be paid in relation to the
year ended 31 December 2024. Input the date in the format DD/MM/YYYY (eg, 03/04/2023 for 3 April 2023).
(2 marks)
Corporation tax payment date

Taxab Ie tota I profits

Exempt ABGH distributions

Augmented profits

Corporation tax due date for Y/E 31/12/2024 is

LOs 5b, 5c, 5d
Total:10 marks

7 Mayet Ltd
7.1 Mayet Ltd, an unquoted trading company, prepares accounts to 30 June and has no associated companies. The draft
accounting profits for the year ended 30 June 2023 are £95,000.
The following items have been added or deducted in arriving at the draft accounting profit:

Note £
Depreciation 4,500
Pension cost 1 10,000
Salaries 2 155,000
Qualifying donation 3 14,000
Exempt d ividends received 4 11, 700
Bank interest receivable 1 3,000

Notes
1 £8,000 of pension contribution was paid during the year ended 30 June 2023, with £2,000 accrued at the year
end.
2 The salaries consist of £55,000 paid to junior staff, and £100,000 paid to a director.
3The qualifying donation of £14,000 in the accounts represents an amount paid to a charity in April 2023. A further
£2,000 was paid to another charity in July 2022, but this amount had been accrued in the accounts of the previous
accounting period.
4 Exempt dividends received from unrelated UK companies.
In addition, the following item has not yet been included in the accounts:
• The company wrote off a debt of £7,000 which related to an amount owing from a customer.
Requirement
Using the standard format below, compute Mayet Ltd's taxable total profits for the year ended 30 June 2023. You
should enter a number in each relevant box. If an amount is not taxable or no adjustment is required you must enter
a zero or a dash into the relevant box.
(8 marks)
 Mayet Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Dividends

Qualifying donation

Taxable total profits

WORKING
Trading income

Draft accounting profits

Depreciation

Pension cost

Salaries

Qualifying donation

Exempt dividends received

Bank interest receivable

Debt write-offs

Trading income

72 In the year ended 30 June 2024 Mayet Ltd expects taxable total profits of £1 00,000 and is expected to receive
exempt dividends of £10,000 from unrelated UK companies and exempt dividends of £2,000 from an unrelated
Icelandic company.

Requirement
Complete all the boxes below and state the first date by which any corporation tax should be paid in relation to the
year e n d e d 30 June 2024. In put the date in the format DD/MM/YYYY (eg, 03/04/202 3 for 3 April 2023).
(2 marks)
Corporation tax payment date

Taxable total profits

Exempt ABGH distributions

Augmented profits

Corporation tax due date for Y/E 30/06/2024 is

LOs 5 b, 5c, 5 d
Total: 1 0 marks
8 Fonic Ltd
8.1 Fonic Ltd, an unquoted trading company, prepares accounts to 30 September and has one wholly owned subsidiary.
The draft accounting profits for the year ended 30 September 2023 are £852,000. The following items have been
added or deducted in arriving at the draft accounting profit:

Note £
Depreciation 130,600
Profit on disposal 1 2,000
Property income 2 16,500
Exempt d ividends received 3 10,800
Bank interest receivable 4,900
Entertaining 4 6,000

Notes
1 The profit was on disposal of a fixed asset
2 Property income relates to rental of land next to the Fonic Ltd's factory. The rent received from 1 October 2022 to
31 August 2023 was £16,500, with a further £1,500 for the month of September 2023 outstanding as at 30
September 2023.
3 Exempt dividends received from unrelated UK companies.
4 Entertaining costs relate to a staff Christmas party costing £2,000 (£200 per employee) and client lunches totalling
£4,000 (average cost per client £80).
In addition, the following items have not yet been included in the accounts:
• Gift of vouchers to 100 clients. The vouchers were for £50 each and could be used to buy food hampers.
• Gift of £500 to a local hospice. An article appeared in the local paper including a photo of the directors handing
over a presentation cheque.
Requirement
Using the standard format below, compute Fonic Ltd's taxable total profits for the year ended 30 September 2023.
You should enter a number in each relevant box. If an amount is not taxable or no adjustment is required you must
enter a zero or a dash into the relevant box.
(8 marks)
Fonic Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Dividends

Property income

Taxable total profits

WORKING
Trading income

Draft accounting profits

Depreciation

Profit on disposal

Property income

Exempt dividends received

 Bank interest receivable

Entertaining

Vouchers

Gift to hospice

Trading income

8.2 Assume that Fonic Ltd has taxable total profits of £600,000 and has not received any dividends in the year e n d e d 30
September 2024.
Requirement
State:
• the profits limit for the year ended 30 September 2024, that is used to determine whether Fonic Ltd must pay
corporation tax by instalments; a n d
• the first date by which any corporation tax should be paid in relation to the year e n d e d 30 September 2024. Input
the date in the format DD/MM/YYYY (eg, 03/04/2023 for 3 April 2023).
(2 marks)
Corporation tax limit and payment date

The p rof i ts Iim it i s

First payment of corporation tax due date

LOs 5 b, 5c, 5 d
Total: 1 0 marks

9 Selby Ltd
9.1 Selby Ltd, an unquoted trading company, prepares accounts to 31 December and has one wholly owned subsidiary.
The draft accounting profits for the year ended 31 December 2023 are £534,000. The following items have been
a d d e d o r deducted in arriving at the draft accounting profit:

Note £

Depreciation 46,200

Loan interest payable 1 750

Qualifying donation 2 2,000

Pension contributions 3 56,000

Bank interest receivable 6,000

Penalty from HMRC for late payment of corporation tax 4,500

Legal fees 4 52,000

Maintenance costs 3,000

Notes
1 Interest payable on a loan to buy machinery.
2 The qualifying donation of £2,000 in the accounts comprises £1,800 paid during the accounting period and a n
accrual of £200 that the company had agreed to pay but was not paid until 1 5 January 2024.
3 The pension contributions of £56,000 comprise £34,000 paid by the company during the year and an additional
£22,000 accrued at the year end.
4 The legal fees comprise of £15,000 for the renewal of a 40-year lease of a factory, and £37,000 in relation to the
acquisition of a 10-year lease o n an office block.
 In addition, the following item has not yet been included in the accounts:
• Professional! fees consisting of debt collection fees of £300 and a bank arrangement fee of £280 regarding the
loan to buy the machinery.
Requirement
Using the standard format below, compute Selby Ltd's taxable total profits for the year ended 31 December 2023.
You should enter a number in each relevant box. If an amount is not taxable or no adjustment is required you must
enter a zero or a dash into the relevant box.
(8 marks)
Selby Ltd's taxable total profits

Trading income (W1 )

Non-trading loans

Qualifying donation

Taxable total profits

WORKING
Trading income

Draft accounting profits

Depreciation

Loan interest payable

Qualifying donation

Pension contributions

Bank interest receivable

Penalty from HMRC

Legal fees

Maintenance costs

Professional fees

Trading income

9.2 In the year ended 31 December 2024 Selby Ltd expects taxable total profits of £480,000 and is expected to receive
no dividends.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should be paid in relation to the
year ended 31 December 2024. Input the date in the format DD/MM/YYYY (eg, 03/04/2023 for 3 April 2023).
(2 marks)
Corporation tax payment date

Taxable total profits

Exempt ABGH distributions

 Augmented profits

Corporation tax due date for Y/E 31 / 1 2/2024 is

LOs 5 b, 5c, 5d
Total: 1 0 marks

1 0 Knight Ltd
10.1 Knight Ltd, an unquoted trading company, prepares accounts to 31 March and has one wholly owned subsidiary,
Sword Ltd. The draft accounting profits for the year ended 31 March 2024 are £467,000. The following itemshave
been added o r deducted in arriving at the draft accounting profit:

Note £

Depreciation 32,500

Loan interest payable 1 6,400

Property income 2 40,000

Exempt dividends received 3 4,500

Bank interest receivable 5,100

Marketing fees 4 2,000

Fines 5 2,100

Legal fees 6 3,900

Notes
1 Interest payable o n a loan to buy factory premises.
2Property income relates to renting o u t (for £40,000 pa) spare space in Knight Ltd's office building to an unrelated
company throughout the accounting period. However, the tenant has left without paying rent for the period from
1 January 2024 to 31 March 2024 and Knight Ltd is unable to recover this.
3 Exempt dividends received from Sword Ltd, Knight Ltd's wholly-owned subsidiary.
4 Marketing fees of £2,000 related to advertising one of the company's products online (£1,200} and entertaining
prospective customers (£800).
5 Fines consisted of £2,1 00 for employee parking fines whilst o n business trips.
6 The legal fees were in relation to dealing with an HMRC enquiry.
Requirement
Using the standard format below, compute Knight Ltd’s taxable total profits for the year ended 31 March 2024. You
should enter a number in each relevant box. If an amount is not taxable or n o adjustment is required you must
enter a zero o r a dash into the relevant box.
(8 marks)
Knight Ltd's taxable total profits

Trading income (W1)

Non-trading loans

Dividends

Property income

Taxable total profits

 WORKING
Trading income

Draft accounting profits

Depreciation

Loan interest payable

Property income

Exempt dividends received

Bank interest receivable

M arketin g fees

Employee parking fine __________

HM RC fine __________

Trading income

10.2 In the year ended 31 March 2025 Knight Ltd expects taxable total profits of £420,000 and is expected to receive
the exempt dividends from Sword Ltd of £10,000.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should be paid in relation to the
year ended 31 March 2025. Input the date in the format DD/MM/YYYY(eg, 03/04/2023 for 3 April 2023).
(2 marks)
Corporation tax payment date

Taxable total profits

Exempt ABGH distributions

Augmented profits

Corporation tax due date for Y/E 31/3/2025 is

LOs 5b, 5c, 5d
Total:10 marks
1 Ethics

1 The correct answer is:

B Professional intellect
The five fundamental principles of the ICAEW Code of Ethics are:
• Integrity
• Objectivity
• Professional competence and due care
• Confidentiality
• Professional behaviour

2 The correct answer is:

B Integrity
The correct answer is:
C Professional behaviour

3 The correct answers are:

A Objectivity
D Confidentiality
Sandra may be biased in her dealings with the company because of her relationship with Heather, a n d this threatens
objectivity.
Sandra may acquire information in her work which may be to Heather's advantage, but she must respect the
confidentiality of such information.

4 The correct answer is:

A When he suspects a client of money laundering
Richard must inform the NCA (National Crime Agency) if he suspects a client of money laundering.
Confidentiality is required in respect of prospective o r former clients, a n d must b e maintained even in a social
environment.

5 The correct answers are:

A Self-interest threat
D Familiarity threat
Roger is experiencing familiarity threats which occur when, because of a close relationship, a professional accountant
becomes too sympathetic to the interests of others. As Jennifer's husband, he is himself also financially involved,
which poses a self-interest threat.
{SAMPLE EXAM)
 6 The correct answers are:
A Freddy is laundering money through his business and as Florence is aware of this she is required to disclose it to the
proper authorities.
C Florence may be guilty of money-laundering offences as she has assisted Freddy in concealing the proceeds of crime.
Florence should not discuss her decision to g o to the authorities with Freddy. This would amount to tipping off which
is in itself a n offence under money laundering legislation.
Florence may well have felt justified in increasing her fee for such risky work but in the circumstances this probably
amounts to possessing the proceeds of a criminal activity which is another offence.

7 The correct answer is:

B Now
If he has reasonable suspicion, he should not try to obtain proof before reporting.
The correct answer is:
D The firm's Money Laundering Reporting Officer
Iqmal's responsibility is only to report to the MLRO.

8 The correct answer is:

C Timescale involved
The other three are explicitly stated in the ICAEW Code of Ethics as factors to consider.

9 The correct answer is:

A Offence committed by Stephanie
Stephanie has committed an offence under the legislation as she has acquired criminal property, the criminal property
being the proceeds of tax evasion.
The correct answer is:
C Offence committed by Trevor
Trevor has committed the offence of tipping off as h e is aware that a suspicious activity report (SAR) may have been
made by his firm's MLRO.

10 The correct answer is:

C Advocacy threat

11 The correct answer is:

B Self-review threat

1 2 The correct answer is:

A Tax evasion is illegal a n d tax avoidance is legal.
13 The correct answer is:
A Inform M r Blythe of the conflict and notify him that C o m p Partners is ceasing to act for him
If the threat cannot be sufficiently reduced, the only acceptable course of action is to cease to act
{SAMPLE EXAM)

1 4 The correct answer is:

C Deliberately postponing the sale of some shares from 5 April until 6 April so that he can use the following year's
annual exempt amount to reduce his capital gains tax
This is an example of legitimate tax planning so is tax avoidance. The others are all examples of tax evasion.
{SAMPLE EXAM)

1 5 The correct answer is:

E Intimidation threat
William is experiencing intimidation threats which occur when a professional accountant is deterred from acting
objectively b y threats, actual or perceived.

1 6 The correct answer is:

B {1) to (3) only
An innocent error in a tax return, unlike a deliberate error, would not give rise to proceeds of crime. Tax avoidance is
not a crime and so cannot give rise to the proceeds of crime.

17 The correct answer is:

B The relationship that her firm has with the client
The other three are explicitly stated in the ICAEW Code of Ethics as factors to consider.

1 8 The correct answers are:

C Unit principle
This is an example of a unit tax as opposed to VAT which is a value based tax. A unit tax is levied at a flat rate per item
regardless of value. It cannot be considered a neutral tax as only supermarkets have to charge it.

19 The correct answer is:

B Statutoryinstruments
While the Budget forms the basis for the Finance Act each year, it is not in itself a form of legislation. Statutory
instruments are the biggest single source of tax law each year. Extra -statutory concessions, as their name implies, are
not statutory documents. Neither are statements of practice.
2 Introduction to taxation

1 The correct answer is:

B HMRC statements of practice
A Finance Act is an Act of Parliament a n d is therefore a source of law. Case law generally sets a precedent which must
b e followed unless overruled on appeal o r superseded by legislation. Statutory instruments are a form of delegated
legislation which are a form of law. Statements of practice are merely a statement of HMRC's interpretation of the law.

2 The correct answer is:

A Progressive taxation
A system whereby the overall proportion of taxation increases as income rises is known as a progressive system.
Originally income tax represented 15% of Pauline's income. After her pay rise it had risen to 20%.
The correct answer is:
C Direct taxation
National insurance contributions are a form of direct taxation.
{SAMPLE EXAM)

3 The correct answer is:

B Efficiency principle
The efficiency principle is concerned with the cost (to a government) of collection of tax being low in relation to the
tax raised. The ability to pay principle is concerned with the ability of the taxpayer to pay the tax.
The correct answer is:
D Indirect taxation
VAT is a form of indirect taxation.

4 The correct answer is:

C {1), (3), (4) and (5) only
As an employee. Wren will be liable to income tax a n d national insurance contributions. As an individual, Wren could
pay capital gains tax o n the disposal of an asset. As an individual Wren must incur VAT i n their day-to-day life as the
final consumer. As an individual Wren cannot personally pay corporation tax.

5 The correct answer is:

C (2), (3) and (5) only
Each partner is liable to tax o n their share of income a n d gains of the partnership, but not for tax o n the shares of
income and gains of the other partners.

6 The correct answer is:

C {1 ), (2) and (4) only
{SAMPLE EXAM)
7 The correct answer is:
C Case law can be superseded by further statutory legislation
Many judgments from tax cases are precedent for future cases which means they must be followed unless
superseded b y legislation or the decision of a higher court. Therefore, this is not guidance. There is also n o 1 2-month
time limit and subsequent legislation can change the law.

8 The correct answer is:

D Tax legislation, commonly in the form of Regulations, containing detailed provisions
HMRC manuals are published by HMRC primarily for the guidance of its own staff.
Statements of practice set out HMRC's interpretation of tax legislation.
Extra -statutory concessions provide a relaxation of the strict legal position of tax legislation.
3 Introduction to i n c o m e tax

£ 3,045

Personal allowance 12,570

Less (£1 1 9,050 - £1 00,000) = £1 9,050 x 1 /2 (9,525)

Reduced personal allowance 3,045

£ 5,133

Tax o n non-savings income £25,565 * 20% 5,1 1 3

Tax o n savings income - savings income nil rate band £1,000 x 0% 0

Tax o n savings income £1 00 x 20% 20

Income tax liability 5,133

3 The correct answer is:

B £12,570
The marriage allowance does not affect Grainne’s personal allowance because it is claimed as a tax reducer.
The correct answer is:
F £834

Net income 1 8,000

Personal allowance (12,570)

Taxable income 5,430

Tax at 20% 1,086

Marriage allowance (£1,260 x 20%) (252)

Income tax liability 834

4 The correct answer is:
A £1,785
Extend BRB by Gift Aid = £37,700 + (£720 x 100/80) = £38,600

Tax o n non-savings income

£38,600 x 20% 7,720

£ 1 3 0 x 40% 52

Tax o n dividend income

£1,000x 0% 0

£4,200 x 33.75% 1,418

£43,930 9,190

Less tax already paid

PAYE (7,405)

Tax payable 1,785

5 The correct answer is:

C £20,424

Tax o n dividend income

£1,000 x o% 0

£36,700 x 8.75% 3,211

£51,000 x 33.75% 1 7,21 3

£88,700 20,424

6 The correct answer is:

B Charlie's liability would decrease and Sarah's would b e unchanged.
Charlie's liability would be reduced by 20% of £1,260. Sarah’s liability is nil a n d would remain so because her income
is covered by the personal allowance both with and without the claim for the marriage allowance.

£ 7,739

Tax o n non-savings income £36,500 * 20% 7,300

Tax o n dividend income - dividend nil rate band £1,000 * 0% 0

Tax o n dividend income £1,300 x 33.75% 439

Income tax liability 7,739

£1,300 of dividend income is taxed at 33.75% as the cumulative income taxed so far is £38,500 (£36,500 + £2,000) which
utilises the basic rate band of £37,700.
 £ 7,896

Taxable income (all savings) = £42,000

Tax

£5,000 x 0% 0

£500 x 0% 0

£32,200 x 20% 6,440

£1,320 (£1,056 x 100/80) x 20% (extended band) 264

£2,980 x 40% 1,192

£42,000

Income tax liability 7,896

9 The correct answer is:

B At source by paying net of basic rate income tax
The correct answer is:
F By extending the basic rate b a n d

10 The correct answer is:

B £11,205

Personal allowance 12,570

Less abatement

1 / 2 x (£102,730- £100,000} (1,365)

Reduced personal allowance 11,205

11 The correct answer is:

D £600

£ £

Tax o n non-savings income 3,000 x 20% 600

Tax o n saving income:

- in savings starting rate b a n d 2,000 x Q% 0

5,000

- savings income nil rate band 800 x 0% 0

5,800
Tax o n dividend income:

- dividend nil rate band 500 x 0% 0

6,300

Income tax liability 600