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Hi Sir,
could you help me with a question from the BPP revision kit? (Please note- I have rushed on to practice questions without finishing the OT study kit because I am sitting the exam in December, so please forgive the gaps in my current knowledge!)
In 2016/17 Clive* has taxable income (after deduction of his personal allowance) of £3000 non-savings income and 12,500 savings income. What is his tax liability for that year? (*I have changed the name to avoid copyright issues).
Answer:
£3000 @ 20% = 600 (clear enough)
£5000-£3000=£2000 @ 0%= 0 (starting rate band) (what is this?) ?
£1000@0% (savings income nil rate band) (?)
£(12500-2000-1000)=9500@20%= 1900 (This is the savings income minus the above two)
Tax liability= 2500Could you possibly explain the middle two calculations in a sentence each?
Thank you!
You cannot hope to work questions from the revision kit until you have worked through the OT lectures and notes – the issues of the 0% starting rate for savings income and the savings income nil rate band that you query are basic technical knowledge which are dealt with in detail and with examples in chapter 2.
You cannot run before you can walk! You must acquire the technical knowledge before you attempt any questions from the revision kit!!ok thank you. I did get up to chapter 6, but I will go back and look at chapter 2.
Sadly this is not a subject that you can rush as it is entirely based on technical knowledge that has to be learned – and the best way to learn it is to work through the lectures and use the OT material before then going on to attempt revision kit questions.
I hope you are able to find the time to give over to your studies in the lead up to the December exam though I fear you have left the study until very late
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