2 Introduction to taxation

1 Which of the following items is never a source of UK tax law?

A The annual Finance Act
B HMRC statements of practice
C Case law
D Statutoryinstruments
LO I f

2 Pauline used to earn £20,000 and paid £3,000 i n income tax per annum. She has recently received a substantial pay rise
and now earns £50,000. Her revised income tax is £10,000.
Requirements
What is the principle o n which this tax system is based?
A Progressive taxation
B Regressive taxation
National insurance contributions are a n example of:
C Direct taxation
D Indirect taxation
LO 1b

3 O n e argument proposed in debates about taxation, is that the cost of collecting tax should b e low in relation to the tax
raised.
Requirements
The principle behind this argument is the:
A Ability to pay principle
B Efficiency principle
VAT is an example of:
C Direct taxation
D Indirect taxation
LO 1b
4 Wren is an individual who does not have a trade or business of any kind. Wren is an employee earning £30,000 per year
and a shareholder in Firm Ltd. Wren has heard that the following taxes exist in the UK and is unsure which of them they
pay personally:
(1) Capital gains tax
(2) Corporation tax
(3) Income tax
(4) National insurance contributions
(5) Value added tax
Requirement
Which of the following options correctly identifies which taxes Wren could or does suffer personally?
A Alli of them
B (1), (3) and (4) only
C (1), (3), (4) and (5) only
D (1), (2), (3) and (4) only
LO 1e

5 John and Dana operate a VAT-registered partnership, employing a large number of staff.
Requirement
Which of the following options correctly identifies which taxes the partners are jointly and severally liable for?
(1) Income tax on each partner's share of profits from the partnership
(2) Income tax of employees deducted under the Pay As You Earn (PAYE) system
(3) Employerand employee national insurance contributions payable in respect of their staff
(4) Capital gains tax on each partner's share of partnership gains
(5) VAT as a supplier of goods
A Alli of them
B (1), (2) and (3) only
C (2), (3) and (5) only
D (1), (2), (3) and (5) only
LO 1e

6 Which of the following are functions carried out by HMRC?

(1) Collect and administer direct taxes
(2) Collect and administer indirect taxes
(3) Pay and administer child support payments
(4) Collect repayments of student loans
(5) Pay and administer the state pension
A (1 ) and (2) only
B (1), (2) and (3) only
C (1), (2) and (4) only
D (1), (2), (3) and (5) only
LO 1e

7 Which of the following options is correct regarding case law, as determined by tax cases in court?
A Case law is purely for guidance when interpreting statutory law
B Case law applies for the 12 months following the date of the particular court case
C Case law can be superseded by further statutory legislation
D Case law sets a precedent meaning the law can never be changed
LO I f
8 Which of the following options correctly describes a statutory instrument?
A Published by HMRC primarily for the guidance of its own staff
B Sets out HMRC's interpretation of tax legislation
C Provides a relaxation of the strict legal position of tax legislation
D Tax legislation, commonly in the form of Regulations, containing detailed provisions
LO I f
3 Introduction to i n c o m e tax

1 Patrick has net income for 2023/24 of £1 1 9,050.

Requirement
What is his personal allowance for 2023/24?
You may enter your answer as a positive or negative number

LO3b

2 In 2023/24, Mackenzie has taxable income (after deducting the personal allowance) of £25,565 (non-savings income) and
£1 J 00 (savings income).

Requirement
What is Mackenzie's total income tax liability for 2023/24?

LO 3h

3 William a n d Grainne are married. In 2023/24 William received non-savings income of £7,000. For many years Grainne has
run a small shop and her business has made adjusted trading profits of £18,000 for 2023/24. The couple have no other
sources of income and claimed the marriage allowance in 2023/24.

Requirements
What is Grainne's personal allowance i n 2023/24?
A £11,250
B £12,570
C £13,750
What is Grainne's income tax liability in 2023/24?
D £1,338
E £1,086
F £834
LO3b

4 During 2023/24 Kael had taxable income (after deduction of the personal allowance) of £38,730 (non-savings income)
and £5,200 (dividend income). Tax of £7,405 has been deducted from Kael's non-savings income. He also paid £720 as a
Gift Aid donation to his son's school (a registered charity).
Requirement
What is Kael's income tax payable by self- assessme nt for 2023/24?
A £1,785
B £1,965
C £2,122
D £9,190
LO 3h
5 In 2023/24, Paloma has taxable income (after deduction of the personal allowance) of £88,700 (all dividend income).

Requirement
What is Paloma's income tax liability for 2023/24?
A £27,940
B £20,512
C £20,424
D £16,181
LO 3h

6 Charlie a n d Sarah are married. In 2023/24 Charlie and Sarah have net income of £23,000 and £1 1,250 respectively.

Requirement
What effect would the marriage allowance have o n Charlie and Sarah's income tax liabilities in 2023/24?
A Both liabilities would decrease.
B Charlie's liability would decrease and Sarah's would b e unchanged.
C Charlie's liability would be unchanged a n d Sarah's would decrease.
D Both liabilities would remain unchanged.
LO 3 b

7 In 2023/24, Glenda has taxable income (after deducting the personal allowance) of £36,500 (non-savings income) and
£2,300 (dividend income).
Requirement
What is Glenda's total income tax liability for 2023/24?

LO 3h

8 In 2023/24 Mabel had taxable income (after deducting the personal allowance) of £42,000, all of which represented
savings income. She paid £1,056 as a Gift Aid donation to the NSPCC (a registered charity).
Requirement
What is Mabel's income tax liability for 2023/24?

LO 3h

9 During 2023/24 Jacob gave a cash donation of £2,000 to a registered charity. His only income is an annual salary of
£55,000. Identify how Jacob obtains tax relief for his gift.

Requirements
He receives basic rate tax relief:
A At source by deduction from his salary under payroll giving
B At source by paying net of basic rate income tax
C By extending the basic rate b a n d
He receives higher rate tax relief:
D At source by deduction from his salary under payroll giving
E At source by paying net of basic rate income tax
F By extending the basic rate b a n d
LO 3h
1 0 Puneet's only source of income in 2023/24 is a salary of £102,730.

Requirement
What is his personal allowance for 2023/24?
A £12,570
B £11,205
C £9,340
D £1,365
LO3b

11 In 2023/24, Pascal had taxable non-savings income (after deducting the personal allowance) of £3,000, £2,800 of savings
income a n d £500 of dividend income.
Requirement
What is his income tax liability for 2023/24?
A £1,160
B £960
C £643
D £600
LO 3h

12 Margaret is self-employed and has taxable trading profits (after deduction of the personal allowance) of £37,000 in
2023/24. During 2023/24 Margaret also received dividend income of £9,000.

Requirement
How much of Margaret's dividend income is subject to tax at 33.75% in 2023/24?
A £6,300
B £8,000
C £8,300
D £9,000
LO 3h

13 In 2023/24, Bussola has taxable non-savings income (after deduction of the personal allowance) of £210. During 2023/24
she also received taxable savings income of £38,300.
Requirement
What is Bussola's income tax liability for 2023/24?

LO 3h

1 4 Manav has taxable income (after deduction of the personal allowance) in 2023/24 of:

Non-savings income £17,015

Savings income £1,800

Requirement
What is Manav's income tax liability for 2023/24?

LO 3h
15 Frederick works as an employee of Wood Ltd. Frederick's only source of income is employment income. Frederick's
taxable income (after deduction of the personal allowance) for 2023/24 was £15,815. During 2023/24 Frederick paid
£3,100 in income tax via PAYE.

Requirement
What is Frederick's income tax payable under self-assessment for 2023/24?

LO 3h

16 Darcy is self-employed and has trading profits assessable in 2023/24 of £198,000.

Requirement
What is Darcy's personal allowance for 2023/24?
You may enter your answer as a positive or negative number

LO3b

17 Dahlia has taxable income in 2023/24 of £133,000 (non-savings income), £27,600 (savings income) and £1 5,000
(dividend income).

Requirement
What is Dahlia's income tax liability for 2023/24?
A £63,757
B £64,376
C £58,326
D £63,982
LO 3h

18 Diane is self-employed and has trading profits assessable in 2023/24 of £1 1 8,000.

Requirement
What is Diane's personal allowance for 2023/24?
You may enter your answer as a positive or negative number

LO3b

1 9 Geoff had taxable income (after deduction of his personal allowance) of £1 4,450 of non-savings income in 2023/24. His
civil partner, Jessica, had n o income during 2023/24. Jessica made a marriage allowance election in 2023/24.

Requirement
What is Geoff's income tax liability for 2023/24?

LO 3h
2 0 During 2023/24 Leanne was a higher-rate taxpayer (net income of £80,000) but her husband Richard stayed at home to
look after their children, a n d had n o income in 2023/24. Both Leanne and Richard are aged 40.

Requirement
Which of the following statements about the personal allowance is true?
A Leanne's personal allowance is reduced because her income exceeds the basic rate band.
B An election can b e made to transfer all of Richard's personal allowance to Leanne.
C An election can b e made to transfer £1,260 of Richard's personal allowance to Leanne.
D N o election can be made to transfer any part of Richard's personal allowance to Leanne.
LO3b

21 Sarah is married to Arthur. Sarah has net income in 2023/24 of £29,900. Arthur has net income for 2023/24 of £10,000.
Wherever possible they claim the marriage allowance.
Requirement
What is Sarah's taxable income in 2023/24?
A £12,570
B £17,330
C £16,070
D £29,900
LO3b

22 Sheila has taxable income after deducting the personal allowance {all non-savings income) in 2023/24 of £40,200. She is
married to Alice, who has net income i n 2023/24 of £9,000. Wherever possible they claim the marriage allowance.

Requirement
What is Sheila's income tax liability for 2023/24?

LO3b

23 Maalik is employed by Artichoke Ltd and has taxable income i n 2023/24 of £20,000 (after deduction of the personal
allowance). O n 1 December 2023 Maalik paid £420 to a charity under the Gift A i d provisions.

Requirement
In 2023/24 the Gift Aid payment will:
A Increase Maalik's income tax liability
B Decrease Maalik's income tax liability
C Have no impact o n Maalik's income tax liability
D Generate a refund of income tax payable to Maalik
LO 3h

2 4 Sandra has rental profits assessable in 2023/24 of £128,000.

Requirement
What is Sandra's personal allowance for 2023/24?
You may enter your answer as a positive or negative number

LO3b