Questions and Answers of Taxation of Individuals

State the maximum contribution to registered pension schemes on which an individual could obtain tax relief in 2017-18 if the individual's earnings for the year were:(a) £120,000(b) £1,200.
(a) Wesley has no income at all for tax purposes in 2017-18. He belongs to a registered pension scheme which operates relief at source and he makes pension contributions during 2017-18 which are all
Freda is a member of a registered pension scheme which operates tax relief at source.She has income from self-employment of £60,000 in 2017-18 and makes pension contributions of £1,000 (gross) per
During the year to 31 May 2017 , an employer made contributions of £400,000 into a registered pension scheme. Explain how tax relief will be given on the contributions mad e during the year to 31
An employer's contributions into a registered pension scheme during the year to 30 June 2017 are £600,000. Explain how tax r elief will be given on the contributions of£1,860,000 which the employer
Calculate the annual allowance available in 2017 -18 (including unused annual allowance brought forward) to an individual with total pension input amounts as follows:2014-15 £25,000 2015-16
Karen belongs to a number of registered pension schemes. Until tax year 2009 -10 she had received no benefits from any of these schemes but in October 2009 she took a lump sum of £350,000 from one
Diane is self-employed and a member of three registered pension schemes. Her pension input amounts for 2017-18 for each of these schemes are as follows:Scheme A: £12,500 Scheme B: £4,400 Scheme C:
Sharon is a member of two registered pension schemes. She receives no benefits from either of these schemes u ntil 19 March 2009 , when she takes a lump sum of £9 57,000 from one of her schemes. On
Edna's total pension input amounts for tax years 2014-15 to 2017-18 are as follows:The annual allowance has been £40,000 since 2014 -15. Edna has no unused annual allowance to bring forward from
Damon is a member of a defined benefit registered pension scheme. On retirement, he will receive an annual pension equal to 1/60th of final salary for each year of pensionable service. He will also
Compute the annual allowance charge pa yable by each of the following employees for tax year 2017-18, assuming in each case that "adjusted income" for the year does not exceed £150,000 and that
Irma is self-employed. Her trading income for 2017 -18 is £64,880 and during the year she makes net contributions to a registered pension scheme of £6,000. Her only other income in 2017-18 consists
Stuart is a member of a registered pension scheme. He took no benefits from this or any other scheme until February 2018 , when he received a lump sum of £ 320,000 and began to receive a pension of
For each of the following taxpayers, state the dates on which the 2017 -18 income tax is due to be paid and calculate the amount payable on each date. (Ignore Class 4 NICs).(a) Guy's 2016-17 income
Barbara (see Examples 2 and 3 above) pays all of her late payment penalties on 3 March 2020. Calculate the total interest payable by Barbara in relation to her income tax and Class 4 NICs for
Barbara's liability to income tax and Class 4 NICs for 2016-17 was £26,000, of which £4,000 was deducted at source. Her liability for 2017 -18 is £30,000, of which £1,000 has been paid by
Barbara makes the following payments for 2017-18:Compute the late payment penalties (if any) which Barbara would incur and state the dates by which these penalties should be paid. 31 January 2018 8
Dorothy's income tax and Class 4 NICs liability for 2016-17 was £ 24,600, of which £600 was deducted a t source. Her liability for 201 7-18 is £ 28,000, of which none is deducted at source. She
Jabran did not receive a notice to file a tax return for 2016 -17 but he was aware that he had income which had not been assessed to tax. He notified HMR C of this fact on 2 October 2017 and a return
Frances paid income tax and Class 4 NICs of £47,000 in 2016-17, of which £19,000 was paid via the PAYE system. Her total liability for 2017-18 is £69,000, of which £21,000 is paid via PAYE. Her
(a) Compute the primary Class 1 NICs payable by the following weekly -paid employees for the week ending 11 August 2017:(i) Employee A has earnings for the week of £105.(ii) Employee B has earnings
Compute the primary and secondary Class 1 NICs payable in relation to the following employees:(a) A earns £170 for the week ending 23 June 2017.(b) B earns £780 for the week ending 23 June 2017.(c)
Joan is a company director. Her salary is paid on the last day of each month. Her gross salary throughout 2017 was £8,400 per month but she was awarded a 4% pay increase as from 1 January 2018 . She
During 2017-18, an employee earns £4,000 per month.(a) Calculate the total primary Class 1 NICs payable for the year.(b) What would the total primary contributions be for t he year if the employee
Mark starts his own business on 1 August 2017 and is self-employed for 36 weeks in tax year 2017-18. His trading profit which is assessed to income tax for 2017 -18 is £9,250.Calculate the Class 2
Rework the previous example, given that the employee in question is a company direct or.Data from previous exampleDuring 2017-18, an employee earns £4,000 per month.(a) Calculate the total primary
Calculate the amount of CGT payable for 2017-18 by each of the following individuals. In each case, "taxable income" comprises the individual's total income, less reliefs which may be deducted from
Brenda is a company director and earns a regular monthly salary of £6,000. In December 2017 she received a £20,000 bonus. She is provided with a diesel -engined company car which has an emission
In 2017-18, George is provided with a petrol -engined motor car by his employer who pays for all fuel and other running costs. The car had a list price when new of £27,900 and has an emission rating
Leonard is employed and receive d a gross salary of £3,335 per month during tax year 2017-18. He also has a small business and paid 53 Class 2 NICs for the year. His trading income for 2017-18 was
(a) Alison has been self -employed for many years. Her profit for tax year 2017 -18 is £5,600. Is she liable to pay Class 2 NICs for the year?(b) Amanda starts her own business on 1 June 2017 and
Calculate the Class 4 NICs payable in each of the following cases:(a) Shawn has trading income for 2017-18 of £14,880.(b) Catherine has trading income for 2017-18 of £50,000.(c) Paul has trading
(a) Sabrina has two employments throughout 2017 -18. Calculate the ref und of NICs due for the year if her regular monthly earnings from the two employments are:(i) £850 and £1,250 (ii) £2,000
Four taxpayers each make three chargeable disposals during 2017-18. Compute their taxable gains for the year (assuming that there are no unrelieved losses brought forward or carried back) if these
Which of the following are chargeable assets for CGT purposes?(a) shares in a limited company(b) gilt-edged securities(c) an antique table worth £20,000(d) an antique chair worth £5,000(e) a
An individual has capital losses of £2,500 in tax year 2017-18. There are no unrelieved losses brought forward from previous years. Compute the individual's taxable gains for 2017-18 if capital
Three taxpayers each have £3,000 of capital losses brought forward. Calculate their taxable gains for 2017-18 if their total gains and losses for the year are as follows:(a) Taxpayer A has gains of
Sarah dies on 16 December 2017 , having made net capital losses of £7,300 between 6 April 2017 and the date of her death. Her net gains in the previous three years (and the annual exemption for each
In 2017-18, an individual has capital gains of £263,000 and allowable losses of £12,000.He has no unrelieved capital losses brought forward from previous ye ars. His taxable income for 2017-18
John dies on 3 March 2018 . Between 6 April 2017 and 3 March 2018, he has capital gains of £1,200 and capital losses of £15,400. His net gains in recent tax years (and the annual exemption for each
An individual has capital losses brought forward from previous years amounting to£4,800. Compute the individual's taxable gains for 2017-18 if total gains and losses for the year are as
(a) Richard has net gains for 2017-18 of £17,500 and capital losses brought forward of £3,300. Calculate his taxable gains for 2017-18.(b) Richard has unrelieved trading losses (eligible for
Rosemary's capital gains and losses in recent years (and the annual exemption for each year) have been as follows:There were no unrelieved losses to bring forward from 2013 -14 or earlier. Compute
In 2017-18, Ahmed has capital gains of £13 0,000 and allowable losses of £24,000. He also has capital losses brought forward of £4,700.Ahmed's taxable income for 2017-18 (after deduction of the
Melissa is a sole trader. Her capital gains and capital losses for 2017-18 are £26,600 and£1,000 respectively. She also has capital losses brought forward from 2016 -17 of£13,200 and unrelieved
Carol purchased a holiday flat in December 2007 for £100,000. She spent £5,000 on installing central heating in February 2008 and a further £750 on repainting the interior of the flat in March
(a) A chargeable asset was bought in June 2013 for £41,200 and sold in August 2017 for £73,350. Compute the chargeable gain.(b) A chargeable asset was bought for £15,000 in August 2008. Legal
David was given a chargeable asset in November 2010 at which time the asset had a market value of £7,500. He sold the asset in January 2018. Compute the chargeable gain or the allowable loss if his
Peter buys a chargeable asset for £26,000 in May 2008 . He sells a one-quarter interest in the asset for £12,000 in August 2017 , incurring incidental costs of disposal of £500. The value of the
Edwina bought a chargeable asset in August 2007 for £240,000, paying acquisition costs of £12,000. In June 20 13 she sold a one -quarter interest in the asset for £100,000, incurring disposal
In July 2008, Malcolm bought a piece of land for £40,000. In June 2013 he sold part of the land for £11,000. This disposal was not caused by a compulsory purchase and was h is only disposal of la
Francis acquired an oil painting for £11 ,500 in March 1979. He sold the painting for £87,500 in March 2018.Compute the chargeable gain or allowable loss arising on this disposal if the painting's
In September 2011, Gloria acquired 1,000 ordinary shares in a listed company for £7,000.Trading in the share s was suspended in December 2017 and Gloria claimed that the shares then had a negligible
In June 2008 , Gillian was given shares with a market value at that time of £6,000. In November 2015 she made a successful claim to the effect that these shares now had a negligible value of only
Alan bought a chargeable asset for £2,000 in April 1978 . The asset was sold for £29,500 in Janua ry 2018 . Compute the chargeable gain arising on this disposal if the asset's market value on 31
Jon bough t a chargeable asset for £23,000 in May 1979. He incurred enhancement expenditure of £10,000 in June 1981 an d a further £14,000 in July 1998 . The asset was valued at £58,500 on 31
Hilary bought a c hargeable asset in November 1978 for £3,000. The asset had a market value on 31 March 1982 of £5,000. She sold part of the a sset for £8,000 in November 2017, at which time the
Karen bought a house in 1990 for £42,000. In November 1991 she spent £18,000 on dividing the house int o two self -contained flats. In September 2015 she sold one of the flats for £95,000, at
In 2017 -18, a taxpayer makes a number of disposals, as listed below. Which of these disposals would be exempt from CGT?(a) An antique table sold for £5,000.(b) A watercolour painting sold at
In December 2017 , Michael sells a piece of antique furniture for £ 6,360, paying incidental disposal costs of £320. He had acquir ed the furniture in January 2010 as a gift from his mother.
In October 2017 Keith sells an antique cabinet for £7,200. He incurs incidental costs of disposal amounting to £200. The cabinet cost Keith £2,300 in July 2009 . Compute the chargeable gain.
In March 2018, Naomi sells an oil painting which she had acquired many years previously for £10,000. Compute the allowable loss if she sells the painting for:(a) £7,200(b) £5,700
In September 2017 Kevin sells a drawing for £2,000. He bought the drawing in February 2011 for £50,000 when it was thought (incorrectly) to be by a famous artist. Compute the allowable loss.
In October 2011, Jackie bought a chattel for £3,500. In October 2017 she sells a one-third interest in this chattel for £2,000. Compute the chargeable gai n if the market value of the remaining
In January 2018 Karl sells a one -quarter interest in a chattel for £2,500. On the date of this sale, the remaining three -quarters interest is valued at £8 ,500. The chattel had cost Karl £3,850
Andrew acquired a set of s ix dining chairs in Janua ry 2010 for £1,300. In March 2017 he sold three of the chairs to a friend for £5 ,200 (the other t hree chairs also being valued at £5,200 at
In January 2015 Katrina buys an item of movable plant and machinery for use in her business. The plant costs her £50,000 and capital allowances are claimed. Compute the chargeable gain arising in
An item of movable plant and mach inery is bought in February 2015 for £8,000 and used solely for trade purposes. Capital allowances are available in relation to this item. Compute the chargeable
In June 2015 Katie acquired a 5-year option to buy a piece of land. The option cost her£10,000. In June 2017 she sold the option for £8,000. Compute the chargeable gain.
In January 2008, Fiona acquired a 25-year copyright at a cost of £30,000. In January 2018 she sold the copyright for £35,500. Compute the chargeable gain.
Katherine acquired a 40-year lease on a property on 31 August 1999 for £75,000. On 31 August 2017 she assigned the lease to Francesco for £97,500. The property was never Katherine's residence.
Sandra acquired the following ordinary shares in Pincom plc: Date 29 January 1995 13 August 1999 4 October 2011 No of shares (a) 8,400 (b) 6,300 (c) 5,200. 1,000 1,000 2,000 Cost 4,000 9,500 22,500
On 31 March 1978, Philip acquired a 45-year copyright at a cost of £75,000. The copyright was valued at £82,000 on 31 March 1982. On 31 March 2018, Philip sold the copyright for £47,000. Compute
In March 2010, Sean acquired a pair of matching antique silver candlesticks at a cost of £4,000. In August 2017 he sold one of the candlesticks to James for £6,750. At that time the other
In August 2011, Jim acquired a 99-year lease on a fl at for £170,000. In August 2017, he assigned the lease to Shirley for £212,000. The flat was never Jim's residence. Compute the chargeable gain.
On 31 March 1980, Est elle acquired a patent with a 42 -year life at a cost of £21,000. The patent was valued at £22,000 on 31 March 1982 and Estelle sold the patent on 31 March 2018 for £13,000.
Jean acquired a 30 -year lease on a property in July 2007 for £132,000. I n July 2017 she assigned the lease to Lawrence for £145,000. The property was never Jean's residence. Compute the
In May 2009, Edward paid £350,000 to buy a 20 -year lease on a flat. In November 2017 he granted a 5 -year sub-lease on the flat to Petronella for £150,000. The flat was never Edward's principal
A taxpayer assigns a lease of duration 12 years and 5 months. Calculate the appropriate percentage for use in the CGT computation on the disposal.
On 31 May 1981, Joan acquired a 45 -year lease on a property for £38,000. The market value of the lease on 31 March 1982 was £35,000. Enhancement expenditure of £12,500 was incurred on 31 May
William made the following acquisitions of preference shares in Pangol plc: Date 17 February 2007 13 November 2011 9 October 2015 No of shares 600 200 100 Cost 900 400 300 In January 2017, the
Jeffrey acquired a freehold property in October 2009 for £234,000. In July 2017 he granted Jill a lease on the property for £160,000. The market value of the freehold after the lease had been
Paul made the following acquisitions and disposals of ordinary shares in Crimmon plc: Date 5 June 2011 17 May 2012 17 May 2012 9 June 2012 13 March 2014 28 March 2014 17 October 2017 acquisition
In September 2011 , Joanna acquired a 15 -year lease on a property for £45,000. In September 2017 she granted a four-year sub-lease to Dean for £20,000. The property was never Joanna's residence.
A taxpayer makes the following acquisitions of preference shares in Muvex Ltd: Date 10 August 2017 20 October 2017 1 December 2017 No of shares purchased 1,000 200 150 No further shares are acquired
Paula makes the following acquisitions of ordinary shares in Indigent plc: Date Number of shares 5,000 2,000 1,200 1,800 Cost 6,300 1 July 2010 2 August 2011 2,500 3 February 2014 2,300 4 January
Pauline makes the following purchases of preference shares in Bassoon plc: Date 23 June 1980 14 May 1998 8 July 2017 Number of shares 1,000 2,000 3,000 Cost 1,000 5,800 8,700 The shares had a market
Sherjeel made the following acquisitions of ordinary shares in Truculent plc: Date 27 September 2000 28 July 2002 3 February 2007 5 July 2011 Number of shares 1,200 800 500 300 Cost 3,600 2,800
Jeremy acquired the following ordinary shares in Scarlon plc: Date 19 September 2009 20 October 2011 21 November 2013 22 December 2017 13 January 2018 No of shares 4,000 2,000 1,000 3,000 5,000 Cost
Yvonne made the following acquisitions of ordinary shares in Ranghi plc: Date 30 September 2006 1 December 2010 No of shares 2,000 3,000 Cost 1,200 3,600 In January 2017, the company made a 1 for 5
On 13 May 2012, Ruben acquired 400 shares in Xaron Ltd at a cost of £1,800. On 17 July 2017, the company made a 1 for 8 bonus issue and (on the same day) Ruben sold 50 shares in Xaron Ltd for £7
(a) In November 2006, Yorick bought 6,000 ordinary shares in Togon plc for £30,000.In March 2018 , the company went into liquidation and Yorick received a first distribution of £1 per share. The
Tina made the following acquisitions of ordinary shares in Hombus plc: Date 15 August 1993 23 January 2003 Number of shares 500 700 Cost 1,250 2,800 On 1 June 2014, the company made a 1 for 20
In June 201 6, Walter bought 10 ,000 shares in Ovod plc at a cost of £7 per share. In September 2017 , Rundico plc made a takeover bid for Ovod plc, offering the Ovod shareholders eight Rundico
Suzanne acquired the following ordinary shares in Quarine plc: Date 2 October 1979 10 January 1981 5 December 2001 8 November 2008 24 July 2017 10 August 2017 20 August 2017 31 August 2017 No of
In March 2012, Vincent bought 10,000 ordinary shares in Apezium plc for £44,000. In June 2017, the company went into liquidation and Vincent received a first distribution of £0.50 per share. The
Saeed made the following purchases of ordinary shares in Hyban plc: Date 24 August 1987 25 November 1992 26 February 1998 11 October 2007 No of shares 800 1,200 1,600 400 Cost 960 1,440 2,400 800 In
In April 2014 , Vanessa bought 100 shares in Entagon plc at a cost of £5 per share. The company went into liquidation and Vanessa received a first distribution of 40p per share in July 2017. The
In August 2011, Winston bought 8,000 shares in Hex ico plc for £24,000. In October 2017 Zardac plc made a takeover bid for Hex ico plc, offering the Hex ico shareholders three shares in Zardac plus

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