• avatar says

      150,000 45%

      So for your NS you already taxed 130,000 and now you are to tax Savings, you still have 20,000 (150,000-130,000) to tax using the rate of 20%, thus you get the remaining 20,000 that needs to be taxed at a higher rate of 40% (total of 40 000 in savings)

  1. avatar says

    Chapter 2,Example 8 per the solutions, shows that the personal allowance as 5,440 pounds instead of the 9,440 pounds.Why is the personal allowance reduced and what rules and procedures apply to reducing the personal allowance?

    • avatar says

      if the net income exceeds from 100,000 then PA will be reduced by applying the following formula.

      PA 9440
      less 1/2(ANI-100,000) —-

      but if net income exceeds from 118880 then PA will be nill.

      hope above is for your satisfation.

    • avatar says

      review notes above example10 , the PA of 10500 was applied, but since the ANI was above 26100 , line 4 states that the higher PA is restricted by the formula (1/2(106000-26100)) , but it is reduced to a minimum of 9440 (shown in W1 of example 12) and also stated in the notes.

      furthermore, as stated in the notes if the ANI is to also exceed 100,000 , there will be a further reduction, shown in the 2nd part of W1. so using the PA of 9440 it is reduced by (1/2(106000-100000))
      this is what i gathered from the notes. hope this helps , and most importantly , correct.

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