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Query on savings income exempt from income tax

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Query on savings income exempt from income tax

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by Tax Tutor.
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  • Author
    Posts
  • September 6, 2015 at 8:50 pm #270130
    Rupa
    Member
    • Topics: 6
    • Replies: 4
    • ☆

    Q Said is a professional translator and has made the following investments during the tax year 2014/15.

    i) GBP 400 in shares in the company he works for
    ii) GBP1000 in a New Individual Savings Account
    iii) GBP800 in National Savings & Investments Investment account
    iv) GBP 500 purchasing a National Savings & Investment Certificate

    Which of the above investments will generate income which is exempt from income tax for the year 2014/15?

    A) All of the above
    B) i, ii and iv only
    C) ii iii and iv only
    D) i only

    Answer by Kaplan:

    B.

    Income generated from a New Individual Savings Account and a National Savings & Investments Certificate is exempt from Income Tax.

    Options A, C & D are incorrect because income generated from shares (dividends) and from NS&I investment account is subject to income tax.

    Question to tutor:
    So why is (i) included in the answer? Shares in company he works for generates dividends and this is subject to income tax.

    September 6, 2015 at 10:06 pm #270135
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Clearly only options (ii) and (iv) are exempt. Presumably option B in the question should have simply said those 2 options and not included (i)

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