Tx notes fa22 Final

June 2023 to March 2024 exams
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Example 11 
David and Victoria are married and in 2022/23 David had a trading income assessment of £10,000 
and Victoria received a salary of £30,500.
Calculate the income tax liabilities of David and Victoria assuming that an election is made to 
transfer the transferrable amount of David’s personal allowance to Victoria and state the date 
by which the election should be made. 
5. Deductions from Total Income 
5.1. Reliefs are tax deductible 
The only reliefs examinable in the TX-UK exam are:
(a)
qualifying interest, and
(b)
certain trading loss reliefs - These reliefs are deducted from total income in deriving net income 
and as with the deduction of the PA from net income they are deducted firstly from non savings 
income before savings income and then dividend income.
5.2. Qualifying interest is: 
(a)
On a loan to purchase an interest in a partnership or a contribution to the partnership of capital 
or a loan
(b)
On a loan to purchase plant or machinery used in the business, by a partner
(c)
On a loan to purchase plant and machinery by an employee if used in the performance of 
duties
(d)
On a loan to purchase an interest in a close company
5.3. Loss reliefs 
These will be fully explained in chapter on losses.
 
Example 12 
Kathy has trading profit of £52,000 in 2022/23 and paid £1,000 interest on a loan to purchase plant & 
machinery used in the business of her partnership.
Calculate Kathy’s income tax liability for 2022/23 

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