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Principles of Taxation (Income Tax Computation (Computing Tax Payable…
Principles of Taxation
Intro to tax
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HMRC
Collect and administer IT. CGT, NIC, CT and VAT
Pay and administer Universal Credit, Tax Credits and Child Benefits
Collect repayments of Student Loans
Ensure employers meet Minimum Wage rules
Protect us from tax fraud and customs duty
They DO NOT administer pensions
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Income Tax Computation
Exempt Income
Interest on National Savings Certificates
Income from New Individual Savings Accounts (NISAs) including Junior ISAs
Betting, competition, lottery and premium bond winnings
Some social security benefits such as housing benefits and child benefit
Scholarships
Income tax repayment interest
Certain savings income received gross. i.e. Tax not deducted at source
NS&I Direct Saver Account and Investment Account
Income from government securities - gilt edged/treasury stock
Non taxpaying, self certified individual
Interest on loan between friends
Basic Personal Allowance £10,600
Reduced if Net Income > £100,000
by £1 for every £2 over £100,000
Completely withdrawn if over £121,200
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Calculate tax payable or repayable
- Calculate tax liability on all income
- Deduct tax credits on dividends
- Finally deduc tax suffered at source (PAYE given or on interest)
Gift Aid
Cash donated is deemed to be net gift
Charity receives gross donation (net x 100/80)
Extend tax bands by gross donation
Carry Back Gift Aid Payment
Donation made in 2015/16 can be carried back to get relief in 2014/15 by an election made to HMRC
Deadline: 31st Jan 2016
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