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Test: Tax Questions - UCAT MCQ


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10 Questions MCQ Test Quantitative Reasoning for UCAT - Test: Tax Questions

Test: Tax Questions for UCAT 2024 is part of Quantitative Reasoning for UCAT preparation. The Test: Tax Questions questions and answers have been prepared according to the UCAT exam syllabus.The Test: Tax Questions MCQs are made for UCAT 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Tax Questions below.
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Test: Tax Questions - Question 1

The table shows the total tax paid ($) on annual taxable income.

For example, a person with an annual taxable income of $30,000 will pay $1,440 plus 16% of ($30,000 – $12,000).

Q. Nathan’s annual taxable income is $50,000. What, to the nearest %, is the average rate of income tax he pays over the entirety of his salary?

Detailed Solution for Test: Tax Questions - Question 1

Annual Tax = $6,579.20 + [ 22% x ($50,000 – $44,120) ] 

= $6,579.20 + (22% x $5,880) = $6,579.20 + $1,293.60 = $7,872.80

Average tax rate = 7,872.80 / 50,000 x 100 = 16% (2sf)

Test: Tax Questions - Question 2

The table shows the total tax paid ($) on annual taxable income.

For example, a person with an annual taxable income of $30,000 will pay $1,440 plus 16% of ($30,000 – $12,000).

Q. One year, the lower and upper bounds of each income tax bracket increase by 10%. As a result, how does the amount of tax Mel pays annually on her salary of $38,000 change?

Detailed Solution for Test: Tax Questions - Question 2

The lowest upper bound becomes $13,200, and the tax paid at the top of the bottom bracket becomes 12% x 13,200 = $1,584

Old tax = $1,440 + [ 16% x ($38,000 – $12,000) ] = $5,600

New tax = $1,584 + [ 16% x ($38,000 – $13,200) ] = $5,552 ($48 lower)

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Test: Tax Questions - Question 3

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

  • have a tax-free allowance of £7,050
  • pay tax at 12% on £2,650
  • and pay tax at 24% on the remaining £10,300

Q. How much would a 30-year-old with an annual salary of £41,000 pay in income tax during the tax year 2016-17?

Detailed Solution for Test: Tax Questions - Question 3

Personal allowance, under 60, 2016-17 = £7,050

Tax in Starting band = 12% x £2650 = £318

Tax in Basic band = 24% x ((£41,000 – £7,050 – £2,650) = £7,512

Total Tax = £318 + £7,512 = £7,830

Test: Tax Questions - Question 4

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

  • have a tax-free allowance of £7,050
  • pay tax at 12% on £2,650
  • and pay tax at 24% on the remaining £10,300

Q. What would the monthly tax deduction be from the salary of a 62-year-old earning £17,500 during the 2017-18 tax year?

Detailed Solution for Test: Tax Questions - Question 4

Personal allowance, 60-74, 2017-18 = £9,400

Tax in Starting band = 12% x £2,850 = £342

Tax in Basic band = 24% x (£17,500 – £9,400 – £2,850) = £1,260

Monthly Tax = (£342 + £1,260) / 12 = £133.50

Test: Tax Questions - Question 5

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

  • have a tax-free allowance of £7,050
  • pay tax at 12% on £2,650
  • and pay tax at 24% on the remaining £10,300

Q. How much would a 52-year-old with an annual salary of £43,000 pay in income tax during the tax year 2017-18?

Detailed Solution for Test: Tax Questions - Question 5

Personal allowance, under 60, 2017-18 = £7,275

Tax in Starting band = 12% x £2,850 = £342

Tax in Basic band = 24% x (£43,000 – £7,275 – £2,850) = £7,890

Total Tax = £342 + £7,890 = £8,232

Test: Tax Questions - Question 6

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

  • have a tax-free allowance of £7,050
  • pay tax at 12% on £2,650
  • and pay tax at 24% on the remaining £10,300

Q. How much would a 76-year-old with an annual salary of £47,200 pay in income tax during the tax year 2016-17?

Detailed Solution for Test: Tax Questions - Question 6

Personal allowance = £9,850

Taxable income = £47,200 – £9,850 = £37,350

Tax in S band = 12% x £2,650 = £318

Tax in Basic band = 24% x (£35,000 – £2,650) = £7,764

Tax in Higher band = 44% x (£37,350 – £35,000) = £1,034

Total Tax = £318 + £7,764 + £1,034 = £9,116

Test: Tax Questions - Question 7

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

  • have a tax-free allowance of £6,290
  • pay tax at 11% on £4,240
  • and pay tax at 18% on the remaining £9,470

Q. Two colleagues at a supermarket both earn £21,000 per year. Given that one is 44 and the other is 66, what is the difference in their income tax contributions in 2012-13?

Detailed Solution for Test: Tax Questions - Question 7

44-year-old: 11% x £4,100 + 18% x (£21,000 – £4,100 – £5,235)

= £2,550.70

66-year-old: 11% x £4,100 + 18% x (£21,000 – £4,100 – £6,115)

= £2392.30, which is £158.40 lower

Test: Tax Questions - Question 8

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

  • have a tax-free allowance of £6,290
  • pay tax at 11% on £4,240
  • and pay tax at 18% on the remaining £9,470

Q. To the nearest £0.01, what is the average monthly income tax contribution of a 21-year-old who earns £5,309 during the 2012-13 tax year?

Detailed Solution for Test: Tax Questions - Question 8

Taxable income = £5,309 – £5,235 = £74 per year

Tax at Starting rate = 11% x £74 = £8.14 per year

Monthly Tax = £8.14 / 12 = £0.678 (3sf) per month

i.e. £0.68 to the nearest £0.01

Test: Tax Questions - Question 9

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

  • have a tax-free allowance of £6,290
  • pay tax at 11% on £4,240
  • and pay tax at 18% on the remaining £9,470

Q. During the 2013-14 tax year, Martin, who is 61-years-old, receives a taxable £2,500 bonus. How much more does he pay in income tax compared to what would have been deducted from his £25,000 salary alone?

Detailed Solution for Test: Tax Questions - Question 9

Personal allowance and Tax at Starting rate remain unchanged

Old Tax at Basic = 18% x (£27,500 – £4,240 – £6,290) = £3,054.60

New Tax at Basic = 18% x (£25,000 – £4,240 – £6,290) = £2,604.60

Difference = £450

Test: Tax Questions - Question 10

UK income tax allowances, rates and bands

In order to calculate the amount received from income after tax, you need to know:

  • the allowances – income tax is not deducted from these
  • the bands into which income is allocated
  • the different rates at which income tax will be deducted from the bands

For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

  • have a tax-free allowance of £6,290
  • pay tax at 11% on £4,240
  • and pay tax at 18% on the remaining £9,470

Q. As the 2013-14 tax year begins, Jean’s annual salary is raised from £33,000 to £35,000. Compared with the previous year, how much more does he end up paying in income tax, given that he is 39 years-old?

Detailed Solution for Test: Tax Questions - Question 10

2012-13: 11% x £4,100 + 18% x (£33,000 – £4,100 – £5,235)

= £4,710.70 

2013-14: 11% x £4,240 + 18% x (£35,000 – £4,240 – £5,485)

= £5,015.90, which is £305.20 more

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