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Sir as per the computing of tax savings in using alternative loss relief methods.was it a short cut method u used in d calculation.am actually confused as to how u wrote out 18500 and multiplied by 40percent straight away.pls help . tnks
I assume as you have not stated which example that you are querying that it is Chapter 7, example 3 and it is the higher rate tax saving on 18,550 of taxable income that concerns you? There is no short cut method here – the basis of the calculation is shown in Option 1 at the top of page 180. The taxpayer has income before loss relief of 60,000 which after deducting the PA of 9,440 would leave taxable income of 50,560. The first 32,010 of this would be taxed at basic rate, leaving (50,560 – 32,010) 18,550 to be taxed at the higher rate of 40%.
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