Income Tax and NIC Liabilities
Income-tax computation, employment, self-employment, property and investment income, reliefs, pensions, PAYE and national insurance.
How to study ACCA Applied Skills
Build on Applied Knowledge, use the correct UK law and tax versions, practise workplace-style digital responses and keep each independent 50% pass decision visible.
Core concepts
Concept 1
Income-tax computation classifies income, deducts permitted reliefs, applies allowances and rate bands, and credits tax already collected.
Exam cue: Confirm the tax year and current ACCA tax table before using any amount or rate.
Concept 2
Employment and trading rules use different bases for taxable receipts, allowable deductions, benefits and timing.
Exam cue: Classify each receipt and deduction before building the income-tax computation in statutory order.
Concept 3
National insurance is a separate liability with its own contributor, earnings or profit base, thresholds and collection method.
Exam cue: Calculate income tax, PAYE credit and NIC separately before reconciling the overall position.
Risk pitfalls and guardrails
Mixing accounting treatment with tax deductibility.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Applying rates before allocating allowances and bands in the required order.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Using outdated thresholds from a different Finance Act cycle.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Memory anchors
Taxable Income
Taxable income is income remaining after allowable deductions and qualifying reliefs under the applicable rules.
Personal Allowance
The personal allowance reduces taxable income subject to eligibility and income-based restriction.
PAYE
PAYE collects employment income tax through employer payroll reporting and deduction.
Trading Adjustment
A trading adjustment reconciles accounting profit to taxable profit by removing disallowable and adding taxable items.
NIC
National insurance contributions are computed separately from income tax under the applicable class and earnings or profit rules.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
What is the first reason to classify a receipt as employment, trading, property, savings or dividend income?
An employee receives salary of £48,000 and a taxable benefit of £3,000. Ignoring deductions, what employment income enters the computation?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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