UK Tax Knowledge Quiz:
Tax or No Tax? (Tax May Be Involved / Tax Usually Not Involved?)
1. Buying a chocolate bar: You buy a chocolate bar from a shop.
Check your answer and read the explanation below.
Correct Answer: Tax may be involved. VAT may be included in the price of many goods and services.
2. Buying a book: You buy a printed book.
Check your answer and read the explanation below.
Correct Answer: Usually no VAT is charged to you. Most people have a 'Personal Allowance' (currently £12,570), which is the amount of income you can earn each year without paying any Income Tax at all.
3. Earning money from a summer job: You earn wages from a summer job.
Check your answer and read the explanation below.
Correct Answer: Tax may be involved. Income Tax and National Insurance can apply depending on your earnings and circumstances.
4. Selling your old trainers online: You sell a pair of trainers you no longer want.
Check your answer and read the explanation below.
Correct Answer: Usually no tax, simply because of the sale. Selling personal possessions is different from trading for profit.
5. Buying trainers specifically to resell: You buy limited-edition trainers with the intention of selling them for profit.
Check your answer and read the explanation below.
Correct Answer: Tax may be involved. Regularly buying goods to resell for profit may count as trading.
6. Babysitting occasionally: You occasionally babysit and receive payment.
Check your answer and read the explanation below.
Correct Answer: Tax may be involved. Casual earnings can count as trading income, although the trading allowance may apply.
7. Earning from YouTube: You start receiving advertising income from YouTube.
Check your answer and read the explanation below.
Correct Answer: Tax may be involved. Content-creation income can count as self-employment or trading income.
8. Money sitting in a savings account: You have £2,000 sitting in a savings account.
Check your answer and read the explanation below.
Correct Answer: No tax simply for holding the money. The money itself is not normally taxed just because it is in savings. Interest earned on it may be taxable.
9. Interest earned on savings: Your bank pays you interest on your savings.
Check your answer and read the explanation below.
Correct Answer: Tax may be involved. Savings interest can be taxable, although allowances may mean no tax is actually due.
10. Receiving your net pay: Your employer pays your wages into your bank account after deductions.
Check your answer and read the explanation below.
Correct Answer: Tax may already have been collected. Under PAYE, Income Tax and National Insurance may have been deducted before your net pay reaches you.
UK Tax Challenge:
What Would You Do?
1. Your first payslip looks wrong: Sam starts a Saturday job. His first payslip shows more Income Tax than he expected. What should he do first?
Check your answer and read the explanation below.
Correct Answer: C.
His tax code and HMRC record help determine how much Income Tax should be deducted.
2. No payslip: Maya is paid for her weekend café job, but her employer does not give her a payslip. What should she do?
Check your answer and read the explanation below.
Correct Answer: B.
Employees should normally receive a payslip showing gross pay, deductions and net pay.
3. Summer job and possible overpayment: Leo works only during the summer holidays and has Income Tax deducted from his wages. His total income for the year is much lower than expected.
What should he do?
Check your answer and read the explanation below.
Correct Answer: B.
Someone who works for only part of a tax year can sometimes overpay Income Tax and may be entitled to a refund.
4. Starting a tutoring side hustle: Aisha starts charging younger students for weekly maths tutoring. What should she do?
Check your answer and read the explanation below.
Correct Answer: A.
Casual work such as tutoring can count as trading income, so keeping accurate records is important.
5. Two jobs: Ben has a Saturday job and also starts a summer job. What should he check?
Check your answer and read the explanation below.
Correct Answer: B.
Multiple jobs can affect tax codes and PAYE calculations, so HMRC should have accurate employment information.
6. You sell old clothes online: Sophie sells some clothes she no longer wears on an online marketplace. What should she do?
Check your answer and read the explanation below.
Correct Answer: C.
Selling unwanted personal belongings is different from buying or making goods specifically to sell for profit.
7. You start making money on YouTube: Daniel begins earning money regularly from YouTube videos. What should he do?
Check your answer and read the explanation below.
Correct Answer: B.
Content-creation income can count as trading or self-employment income.
8. Your tax code changes: Emma notices that the tax code on her latest payslip is different from before. What is the best response?
Check your answer and read the explanation below.
Correct Answer: B.
Tax codes can change for legitimate reasons, but students should understand what theirs means and check HMRC information if unsure.
9. Your address changes: Jack moves house while working part-time. What should he do?
Check your answer and read the explanation below.
Correct Answer: B.
Keeping personal details accurate can help prevent problems with tax records.
10. You become self-employed: Priya starts doing regular freelance graphic design work. Which approach is best?
Check your answer and read the explanation below.
Correct Answer: A.
A useful rule is Register, Records, Returns.