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
For the tax year 2024/25, the personal allowance is:
Answer: £12,570
The personal allowance for 2024/25 is £12,570 — unchanged since 2021/22. It is reduced by £1 for every £2 of adjusted net income above £100,000, reaching nil at £125,140.
UK income tax rates for non-savings income in 2024/25 are: basic rate applies up to taxable income of:
Answer: £37,700
The basic rate band for income tax in 2024/25 covers taxable income from £0 to £37,700 (after personal allowance). Income above this up to £125,140 is taxed at the higher rate (40%), and above that at the additional rate (45%).
Employment income for income tax purposes includes:
Answer: Salary, bonuses, benefits in kind (e.g., company car, private medical insurance), and expense allowances not wholly for business use
Employment income encompasses all remuneration from employment: salary, wages, bonuses, tips, taxable benefits in kind (e.g., company car, medical insurance), and expense reimbursements not solely for business purposes.
The benefit in kind for a company car is calculated based on:
Answer: The list price of the car multiplied by the appropriate percentage based on CO2 emissions
The taxable benefit = list price × appropriate percentage (determined by CO2 emissions band). Higher emissions attract higher percentages; zero-emission cars have the lowest benefit in kind percentage.
Which of the following types of income is taxed first in the UK tax computation?
Answer: Non-savings income (employment, trade, rental)
The ordering of income for UK tax purposes is: (1) non-savings income, (2) savings income, (3) dividends. This ordering determines which income uses the basic rate band first and how the starting rate for savings and dividend allowances apply.
UK income tax is charged on the total income of an individual after deducting:
Answer: Personal allowance and reliefs such as gift aid and pension contributions (adjusted net income concept)
The taxable income calculation follows: total income minus reliefs (e.g., pension contributions, gift aid) = net income; minus personal allowance = taxable income. This is the basis on which income tax is charged.