Question No 5: (10 Marks) Income tax is the single largest source of Government revenue in the United Kingdom. It is a tax levied directly on personal income. HM Revenue and Customs (HMRC) is responsible for administering and collecting taxes in UK There are many sources of personal income on which income tax is levied. These include: labour income (the wages and salaries of employees and earnings of the self-employed), income from investments (including interest on savings and the rental income from buy-to-let properties). Income tax is collected in a variety of different ways: for the majority of employees, it is paid via the Pay-As-You-Earn (PAYE) system. The amount of tax to be paid is calculated by the employer and transferred directly to the tax authorities (HMRC). This is also known as being deducted at source. It means the individual does not need to deal directly with HMRC and that the tax is paid promptly or the some tax payers it is paid via the self-assessment (SA) system. The amount of tax to be paid is calculated by the individual and declared on a tax return sent to HMRC. Assuming that the following income and expenditure of an individual who lives in UK as follows: Gross Salary per annum 60,000, Bonus 12,000 per annum, Commission on turnover achieved 2,000 Dividends received from UK companies 42,000, Building society interest 34,000, During the year the individual received interest of 2330 on the maturity of Savings Certificate from NS&I (National Savings and Investments) and Premium bond prizes of 6,500. The individual pays interest of 8,000 p.a. on a loan to invest in a partnership firm. (Qualifying interest). The individual has paid donation of 1200 per annum to Oxfam (Charitable organization) under payroll deduction scheme and he also contributed Donation under Gift aid scheme of 4800 per annum (Gross) Tax deducted by the company under PAYE 6,200. Required: Assuming that you are a citizen of UK, how would you pay your tax to HMRC in regards to the above income and expenditures and briefly explain the different types of assessable income as per UK Tax law. ----ALL THE BEST ---- Question No 5: (10 Marks) Income tax is the single largest source of Government revenue in the United Kingdom. It is a tax levied directly on personal income. HM Revenue and Customs (HMRC) is responsible for administering and collecting taxes in UK There are many sources of personal income on which income tax is levied. These include: labour income (the wages and salaries of employees and earnings of the self-employed), income from investments (including interest on savings and the rental income from buy-to-let properties). Income tax is collected in a variety of different ways: for the majority of employees, it is paid via the Pay-As-You-Earn (PAYE) system. The amount of tax to be paid is calculated by the employer and transferred directly to the tax authorities (HMRC). This is also known as being deducted at source. It means the individual does not need to deal directly with HMRC and that the tax is paid promptly or the some tax payers it is paid via the self-assessment (SA) system. The amount of tax to be paid is calculated by the individual and declared on a tax return sent to HMRC. Assuming that the following income and expenditure of an individual who lives in UK as follows: Gross Salary per annum 60,000, Bonus 12,000 per annum, Commission on turnover achieved 2,000 Dividends received from UK companies 42,000, Building society interest 34,000, During the year the individual received interest of 2330 on the maturity of Savings Certificate from NS&I (National Savings and Investments) and Premium bond prizes of 6,500. The individual pays interest of 8,000 p.a. on a loan to invest in a partnership firm. (Qualifying interest). The individual has paid donation of 1200 per annum to Oxfam (Charitable organization) under payroll deduction scheme and he also contributed Donation under Gift aid scheme of 4800 per annum (Gross) Tax deducted by the company under PAYE 6,200. Required: Assuming that you are a citizen of UK, how would you pay your tax to HMRC in regards to the above income and expenditures and briefly explain the different types of assessable income as per UK Tax law. ----ALL THE BEST