A few personal tax questions

Kelly7

Hi guys

I have my personal tax exam on Monday and there are a few things I have questions on. We haven't been given any answers to the practice papers from college and with only the one practice assessment on here for this module I am worried as I'm not sure if anything I'm doing is right. So if anyone can help me with any of the following I would really appreciate it.

1 - This one I should really know but I think I'm just getting a bit confused. With pensions, I think the total amount gets deducted in the computation of the total taxable income and there is no change to the personal allowance if they are a higher rate tax payer (?)
but with gift aid, I know the gross amount gets added to the personal allowance if they are a higher rate tax payer but does the gross amount also get deducted in the computation of the total taxable income?

2 - I have read in my book about charges for submitting the tax return late but I can't see anything about charges for if you submit your payments late. Is this because we don't have to know this or do I?

3 - If anyone has done the last question on the practice, I'm not sure how the gain on the sale of the house is 0?

4 - And lastly, I have a question where my friend told me the answer was (£2300) but I can't work out how. The question is a bracelet was purchased for £8,000. She told the bracelet in August 2013 for a loss of £2,700 (which was net of 10% commission). Calculate the allowable loss on the sale. I worked it out as the commission is not included so it is £8,000 - £6000 = £2000.

Sorry for all the questions but I thought I'd put them all in one question so even if someone helped with one of them it would help.

Thanks in advance for any help.

Kelly

MarieNoelle

Hi Kelly
I will try to answer some of your questions and I do hope you get this before tomorrow!
1. Personal pensions contributions and charity donations work in the same way. You do not deduct them from income computations but:
- if the taxpayer is a high earner you deduct the gross amount (i.e. x100/80) to calculate adjusted net income (to compare to 100,000) to calculate personal allowances
- When calculating the tax liability the gross amount is added to the basic rate band (and the higher rate band if applicable)
2. Not sure if this is assessable ( I passed ptax 2 years ago!)
3. Again I do not have access to practice questions
4. The deemed PROCEEDS are £6,000 (to restrict the loss of chattels bought or sold for less than £6,000)
so we have
deemed proceeds £6,000
less original cost £8,000
less cost of sale (commission 10% of £3000 = £300)
Allowable loss = £(2,300)

Does it make sense?
Good luck for your exam
MN

Kelly7

Thanks for the reply. Exam is Tuesday, I have some time tomorrow afternoon to revise, getting confused. So, for personal pensions you don't deduct the pension contribution from the total but you do for occupational pensions? I'm not sure where the £3000 has come from in the question on the sale of the chattel? Thanks again Kelly x

MarieNoelle

Hi again,
1. That's correct- contributions paid by the employee into an occupational scheme are an allowable deduction from earnings.
2. We do not know what the proceeds of the sale are but we are told that the overall loss of 2,700 is net of 10% commission, which I interpret as the "gross" loss was 3,000 (100/90 x 2700). The question is actually not brilliantly written as most of the times the commission is a % of the proceeds.
Hope this helps!

topcat

Hi kelly

Good luck for your exam!

You have more than likely seen but there is some 2010 exams guessing the only risk would be memorizing the wrong figures but guessing the calculations would be the same ?

Kelly7

Thanks both. Wish I didn't have to wait 6 weeks til I knew lol. Our teacher told us not to do the older papers so to not risk confusion. X