1. avatar says

    Hello, please I am a bit confused and need a further explanation on the option 3 part. i do not understand why the use of 29,450 pounds to calculate the 20% tax savings instead of 32010 pounds. i think I am missing something.

    • avatar says

      Hi I was confuse too but I use this alternative method hope its correct and you understand as well.
      say no loss was carry forward then david will pay
      60000-9440=50560 taxable profit
      tax will 32010*20%=6402 and 18551*40%=7420
      total tax payable=(6402+7420)=13833 remember this

      if full relief carry forward then david taxable income will be
      tax payable on this 2560*20%=512

      so by carrying forward loss his tax savings are 13833-512=13310.

      what you thinks?

  2. avatar says

    sir , i have a small doubt. i understood how you got the amount ‘6,352’ in the answer(option 2) of example 3. but could you please explain why this amount comes under repayment? i thought of it for a long time but i just cant find the reason. thanks

    • avatar says

      That is the amount of tax that you would have already paid to HMRC in the tax year 2012/13. Therefore, if you chose to use the loss relief for that year, you would be entitled to a refund of the tax already paid which would have been taxable income of $(42,100-9440)=$31,760@20%=$6,352.

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