ExpertEasy2 marksMultiple Choice
ACCA · Question 12 · Income tax and national insurance contributions (NIC) liabilities
Section A
Simon has a net income of £58,000. He makes a gross personal pension contribution of £4,000 and donates £1,000 (gross) to charity under Gift Aid. His partner claims Child Benefit for their two children. What is Simon's Adjusted Net Income (ANI) for the purpose of the High Income Child Benefit Charge (HICBC)?
Section A
Simon has a net income of £58,000. He makes a gross personal pension contribution of £4,000 and donates £1,000 (gross) to charity under Gift Aid. His partner claims Child Benefit for their two children. What is Simon's Adjusted Net Income (ANI) for the purpose of the High Income Child Benefit Charge (HICBC)?
Answer options:
A.
£58,000
B.
£54,000
C.
£53,000
D.
£55,000
How to approach this question
Calculate Adjusted Net Income by taking Net Income and deducting gross pension contributions and gross Gift Aid donations.
Full Answer
C.£53,000✓ Correct
Adjusted Net Income (ANI) is calculated as Net Income less gross personal pension contributions and gross Gift Aid donations. Simon's ANI = £58,000 - £4,000 (pension) - £1,000 (Gift Aid) = £53,000. Since this is above £50,000, he will be subject to the HICBC.
Common mistakes
Forgetting to deduct Gift Aid, or deducting net amounts instead of gross amounts.
Practice the full ACCA TX — Taxation Practice Exam 4
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