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ACCA Applied Skills · Taxation (UK) · The comprehensive computation of taxable income and income tax liability

Which of the following is classed as savings income when computing a UK individual's income tax liability?

Interest received on a bank deposit account is savings income. Dividends from a UK company are dividend income, while property letting profits and occupational pension income are non-savings income. The three categories are taxed in the order non-savings, savings, then dividends, and each category uses different rates.

  1. AInterest received on a bank deposit accountCorrect
  2. BDividends received from a UK company
  3. CTaxable profit from a UK furnished property letting
  4. DOccupational pension income

Explanation

Income is split into non-savings, savings and dividend income. Bank interest is savings income. Dividends are taxed as dividend income at the dividend rates. Property profits and pension income are non-savings income taxed at the normal rates.

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