Fictional rules: the first £6,500 of income is excluded from income tax. A return is required for total income of at least £4,600. There are no other rules. Your total income is £5,400. Which statement applies?

• Filing is not required; the allowance makes this income tax-free.
• Filing is required; the allowance makes this income tax-free.
• Filing is required; the filing threshold makes £800 taxable.

Fictional Area A, Year P rules: file if annual freelance receipts exceed £750; otherwise no return is required. You have wages with tax deducted and £900 annual freelance receipts. These are all the filing rules for this case. Must you file?

• File a return because freelance receipts exceed the limit.
• Do not file because wage deductions settle the filing duty.
• Do not file because only profit counts towards the limit.

In a marginal-band system, entering a higher band makes all earlier income slices taxable at the higher rate.

Circle one:   True   False

In a fictional year, Area B requires a return for any work income earned there. Area C requires one only from its residents. You are resident only in B and earned work income in both. These are the complete rules for this case. Which returns are required?

• Only Area C requires a return for this case.
• Only Area B requires a return for this case.
• Both tax areas require a return for this case.

Using the lesson's definitions, how does an allowed deduction differ from an allowed tax credit?

• A deduction lowers the tax bill; a credit lowers taxable income.
• Both reduce wages paid by the employer before calculating any tax.
• A deduction lowers taxable income; a credit lowers the tax bill.

Two tax systems may cover the same income. What should you do before claiming relief for tax paid elsewhere?

• Check each system's filing duties and the relief's conditions and limits.
• Use the tax paid elsewhere as a full credit against the second system's bill.
• Apply the same relief method and limit in both tax systems.

A fictional return shows £1,350 income tax after reliefs. £950 income tax was withheld from wages and £250 was paid separately towards that same bill. No other payments apply. What balance remains?

• £150 remains due towards this income-tax bill.
• £400 remains due towards this income-tax bill.
• £650 remains due towards this income-tax bill.

You have sorted this year's tax records by year and category. Which routine checks your income and expense entries against records of transactions from the same month?

• Sort by year and category; compare with the previous year's totals.
• Group by bank account; compare balances at each year end.
• Sort by year and category; compare with statements each month.