Taxation

Taxation

Taxation

Answer 1

A separate income tax charge and national insurance contribution payment does not make sense for me and the integration of the two systems is more efficient in my perspective. A combined income tax and NIC's will be more competitive and will remove any extra burden on managers and businesses. The two systems are currently operating separately and the integration of the two will enhance the fairness for general public and will make it easy to understand.

Answer 2

The personal allowance that can be availed for the tax year 2012-2013 is 8015. However as Adam's adjusted trading income is above 100000 i.e. 115000, his personal allowance will be reduced by half the amount in excess of 100000. Computation is shown below.

computation for personal allowance

amount in excess

15000

half of the amount

7500

 

 

total personal allowance

8015

reduction in personal allowance

7500

net personal allowance

515



Answer 3

The computation for income tax payable first involves computing total income. Total income comes out to be 93130 and is entitled to a personal allowance of 8015. After deducting the personal allowance, the taxable income comes out to be 85115. the first chunk of this salary will be taxed at the basic rate which is 20% and then at the higher rate. Computation is shown below

computation for total income

 

 

 

Adjusted trading profits

59,680

Property income

7,750

UK dividends received

19,800

Building society interest received

5,750

Gilts interest

100

 

 

total taxable income

93,080

less personal allowance

8015

taxable income

85,065

income tax up to 34370

6874

income tax for remaining amount (85065-34370)x0.4

20278

total income tax payable

27152

Answer 4

a)

computation of tax liability

 

gross income

40500

pension contribution (40500x0.05)

2025

personal allowance

8105

taxable income

30370

tax liability at basic rate of 20% of taxable income

6074

computation of NIC liability

 

gross income

40500

add pension contribution (40500x0.05)

2025

deduction

7592

total income applicable for NIC

34933

NIC liability at 12%

4191.96

b)

calculation for income tax

 

income from operations

44500

add income from other sources

10000

less cost of leasing van

4400

less salary of helper

2800

less contribution to personal plan

2000

net income

45300

less personal allowance

8105

taxable income

37195

income tax up to 34370 at 20%

6874

income tax for remaining amount

1130

total income tax payable

8004

Level 2 NIC liability is paid at the flat rate of 2.65 per week, hence level 2 liability would be (2.65x52) or 137.8

Level 4 NIC liability is calculated at the rate of 9% after deduction of 7592.

calculation for class 4 NIC liability

 

income from operations

44500

add income from other sources

10000

less cost of leasing van

4400

less salary of helper

2800

less contribution to personal plan

2000

net income

45300

less deduction of 7592

37708

class 4 liability

3393.72

C)

Total take away income in case of being an employee of kwik speed ...