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Income tax computation – Savings Income and Dividend Income
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Sir u r teaching us tax year 2016-17 but we will be examined tax year 2017-18 so what is this sir?
Dear Sir,
Kindly reply its a huge confusion.
Thank you Sir for your detailed Lecture.
I am sorry as I am confused a General clarification to clear, as per my understanding from all three section namely Non Savings, savings and dividend. First we will see the whether total taxable income is coming under which rate ( basic / higher /additional) then if basic he has two benefits up to 1000P he will get nil rate and remaining 4000P 0% starting rate. if he having higher rate then only 500P with 0% will apply. Or any part of non savings has to check first.
Thank you.
Excuse me sir. Are you still solving example 1 (Mr. Smith) or is this another example?
Hi, Is this Example 3? In my notes is a trading profit of £26,000 instead of £20,000.
With £20k it does have sense with £26k it will be higher rate rather than basic rate?
Is there a mistake in lecture notes?
Thank you!
Apologies I meant Example 2.
If it is £26k Example 2 and 3 doesn’t have sense as both will be higher rates, am I right?
Hello Sir, I understand that according to the ACCA exam requirement we always tax income from Nong Saving to Saving to Dividend income but in real life, is it possible to tax saving income first so that one could enjoy the first £5000 nil rate band?
Two questions.
1. If Non-savings net income is exactly 5,000 pounds would the 0% starting rate apply on the savings income?
2. If the Non-Savings Income is less than 11,000(personal allowance) would there be personal allowance deductions from the Savings income and dividend income?
Thanks
Sir could you please explain how and why we tax savings income of 16785 at 20% ?
why don’t we tax the total 20000 at 20% since savings income didn’t go passed 31785 ?
the threshold for the basic band was changed to 32,000 for 2016-17. I think you are using the old text which was before the latest Finance Act 201 changes.
according to the old basic band the threshold is 31785 as you had stated above.
Hi. Why dont you as well gross up the net employment income where paye has already been deducted just as you do for SI and DI and then you can then come down to deduct it from the tax liability.
Hi Eugenia, Salary/Employment Income is always given as a gross figure as mentioned earlier. Hence the grossing exercise is unnecessary/incorrect. You’re never given a ‘net employment income’ so to speak.
Hope that helps.
Hi Sir,
Kindly let me know, on example 7 why you took 32.5% for dividend income? because should it be 10% no?
Hi Shiham,
The higher rate band of 32.5% was used as both the Non saving and Savings amount have exhausted the basic rate. Hence, the next band rate was used for the Dividend.
Hope it helps
At example 4 I do not understand how you calculated less tax credit 4000 ?? Thank You
Hi
The 4000 tax credit was the amount derived from the grossed savings Interest on the tax computation table. i.e Savings interest was 16,000, but when grossed with 100/80 you get 20,000. Now the difference btw the 20,000 and 16,000 is 4,000.
Hope that helps
Hello Sir,
Please I don’t quite get why you used 16,785 @ 20% for saving rate band. 20,000 which is the taxable in income on savings is within the basic rate of 20%, so I didn’t expect that you’d break it further down to 16,785.
Kindly throw more light please.
Thanks.
@chibugo the 15000 and 16785 make up the 31785 @ 20% rate
Hello
Yes, agree with Tyler! I think there is an error in the answer section. Should be 6375 and therefore the income tax payable is 1073.
Thanks for such easy teaching! Very helpful.
Hello Sir,
I think there is a typo error in the Answer to example sheet (Pg 164) for example 8. For the NS , it’s 31785 @20% = 6357 and not 6373 (as printed). Thanks for the excellent lectures 🙂