Taxation — Life in the UK Test practice questions
These practice questions cover Taxation, part of the The UK government, the law and your role chapter of the official handbook, Life in the United Kingdom: A Guide for New Residents. The correct answer and a clear explanation sit under every question.
Practice questions
Which of these is included in income tax?
- Vehicle insurance
- Council tax
- ✓ Pensions — Correct answer
- Fuel duty
Income tax applies to wages, self-employment profits, taxable benefits, pensions, and income from property, savings and dividends.
What is the name of the system where income tax is taken from employment pay by an employer?
- Self-assessment
- Road tax
- National Insurance
- ✓ Pay As You Earn — Correct answer
Pay As You Earn, or PAYE, is the system where an employer takes the correct income tax from pay and pays it to HM Revenue & Customs.
What do self-employed people use to pay income tax?
- PAYE
- A tax disc
- ✓ Self-assessment — Correct answer
- A MOT test
Self-employed people pay their own income tax through self-assessment. This usually includes completing a tax return.
What do income tax payments help pay for?
- Only vehicle repairs
- ✓ Government services such as roads, education, police and the armed forces — Correct answer
- Only local newspapers
- Only private pensions
Money from income tax helps pay for government services such as roads, education, police and the armed forces.
Who collects taxes such as income tax?
- The Driver and Vehicle Licensing Agency
- The police
- ✓ HM Revenue & Customs — Correct answer
- The Citizens Advice Bureau
HM Revenue & Customs collects taxes, including income tax. Employers send PAYE tax to HMRC.