Government & Law questions

Taxation and Driving Life in the UK Test Questions

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Question 1 Medium

If you are self-employed:

Tax is automatically taken from your earnings by a specialised agency

Automatic tax deduction (PAYE) applies to employees, not to self-employed people.

You don’t need to pay tax

You only needed to pay tax on 50% of your earnings

There is no 50% rule — self-employed people pay tax on all taxable profits.

You need to pay your own tax

Self-employed people pay tax through self-assessment by completing an annual tax return.

Correct answer

Explanation

If you are self-employed, you need to pay your own tax through a system called ‘self-assessment’, which includes completing a tax return.

Question 2 Easy

Which two documents do you need to apply for a National Insurance number?

A contract from your employer

An employment contract is not one of the required documents for a National Insurance number application.

Documents that prove your identity

You must prove who you are when applying for a National Insurance number.

Correct answer

Documents that prove that you have permission to work in the UK

Proof of the right to work in the UK is required alongside identity documents.

Correct answer

A document with your address on it, such as a tenancy agreement

Proof of address is not one of the two specified requirements for an NI number application.

Explanation

To apply for a National Insurance number you need documents that prove your identity and that you have permission to work in the UK.

Question 3 Medium

People in the UK have to pay tax on any earnings from (choose THREE options)?

Valuable gifts

Gifts are not listed as taxable income under UK income-tax rules.

Taxable benefits

Benefits in kind from an employer — such as a company car — are taxable.

Correct answer

Income from property, savings and dividends

Rent, interest and share dividends all count as taxable income.

Correct answer

Profits in self-employment

Self-employed people pay income tax on their business profits.

Correct answer

Explanation

People in the UK have to pay tax on their income, which includes: wages from paid employment, profits from self-employment, taxable benefits, pensions and income from property, savings and dividends.

Question 4 Easy

What do you need to do to apply for a National Insurance Number?

Contact the Department for Work and Pensions (DWP)

You must telephone the DWP to arrange a National Insurance number interview.

Correct answer

Contact the NHS

The NHS provides healthcare and is separate from National Insurance number applications.

Ask you employer to get it for you

Employers cannot apply for a National Insurance number on your behalf.

Contact your local MP

MPs are elected representatives — they do not process National Insurance applications.

Explanation

If you have permission to work in the UK, you will need to telephone the Department for Work and Pensions (DWP) to arrange to get a National Insurance number.

Question 5 Easy

What is the minimum age required to drive a motorcycle?

17 years old

You must be at least 17 to drive a car or motorcycle on public roads in the UK.

Correct answer

18 years old

18 is the voting age; the minimum driving age for cars and motorcycles is 17.

21 years old

No such driving age requirement exists; the minimum is 17.

16 years old

16 is the minimum age for riding a moped, not driving a car or motorcycle.

Explanation

In the UK, you must be at least 17 years to drive a car or motorcycle and you must have a driving licence to drive on public roads.

Question 6 Medium

How long can you use your driving licence in the UK if you have a licence from another country?

You need a UK driving licence

You may drive on a foreign licence for up to 12 months before needing to convert to a UK licence.

For up to 2 years

Two years is double the permitted period — non-GB licences are valid for only 12 months.

For as long as it is valid

EU, Icelandic, Liechtenstein and Norwegian licences may be used indefinitely, but others are limited to 12 months.

For up to 12 months

A non-GB driving licence may be used in the UK for up to 12 months before a UK licence is required.

Correct answer

Explanation

If you have a licence from another country, you may use it in the UK for up to 12 months.

Question 7 Medium

What is the system by which the income tax is automatically taken from the employee’s income by their employer and paid directly to HM Revenue & Customs (HMRC)?

“Pay As You Earn” (PAYE)

PAYE is the system by which employers deduct tax automatically from employees' wages.

Correct answer

Tax return

A tax return is used for self-assessment, not the automatic PAYE system.

Pension tax

Pension tax refers to tax on pension income — not the automatic deduction system.

Self-assessment

Self-assessment is used by self-employed people — not by employees under PAYE.

Explanation

PAYE (Pay As You Earn) is the system by which employers automatically deduct income tax from employees' wages and pay it to HMRC. Self-employed people use self-assessment instead.

Question 8 Medium

A National Insurance number does on its own prove to an employer that you have the right to work in the UK:

False

Correct answer

True

Explanation

A National Insurance number records your tax and contributions history but does not itself prove that you have the right to work in the UK — separate documentation is required.

Question 9 Medium

People in the UK do NOT have to pay tax on:

Income from savings

Interest earned on savings counts as taxable income in the UK.

Pensions

State and private pensions are subject to income tax in the UK.

Income from property

Rental income from property is taxable in the UK.

Income from expensive gifts

Gifts are not listed as a source of taxable income under UK income tax rules.

Correct answer

Explanation

People in the UK have to pay tax on their income, which includes: wages from paid employment, profits from self-employment, taxable benefits, pensions and income from property, savings and dividends.

Question 10 Medium

Citizens of Liechtenstein can drive in the UK for as long as their driving license is valid:

False

True

Correct answer

Explanation

Drivers holding a licence from an EU country, Iceland, Liechtenstein or Norway may use it in the UK for as long as it is valid; all other foreign licences are valid for up to 12 months.

Question 11 Medium

Will a non-UK national living in the UK and looking for work, starting work or setting up as self-employed need a National Insurance number?

A non-UK national starting work or self-employment in the UK needs a National Insurance number.

Yes

Non-UK nationals working or setting up as self-employed in the UK need a National Insurance number — though they can start work before obtaining one.

Correct answer

Explanation

True. A non-UK national living in the UK and looking for work, starting work or setting up as self-employed will need a National Insurance number. However, you can start work without one.

Question 12 Medium

Where do UK residents need to register their car or motorcycle?

At the Ministry of Transport (MOT)

The MOT is a vehicle safety test, not a registration agency — registration is done at the DVLA.

At their Local Council

Local councils do not handle vehicle registration — that is the DVLA's responsibility.

At the Driver and Vehicle Licensing Agency (DVLA)

UK residents must register their car or motorcycle at the DVLA.

Correct answer

At the Home Office

The Home Office deals with immigration and security — not vehicle registration.

Explanation

If you are resident in the UK, your car or motor cycle must be registered at the Driver and Vehicle Licensing Agency (DVLA).

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