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Hello Sir,
In the question its mentioned that Assume the official rate of interest for 2018/19 is 3%, for the loan Renner has taken from C Ltd. of 20,000.
But in the answer 2.5% is used. I am confused on this, Is it a trick question?
Since the official rate is 2.5% for 18/19 do we have to use that even tho the question says otherwise?
Thankyou
Manan.
i have one more doubt in this question:-
the occupation pension contribution is 900. but deducted from the income before income tax computation. Why is that?
in question 6 (michael) , the personal pension contribution is not deducted from the employment income but added to the basic rate band for 20% tax at gross amount, but in this question the 900 is deducted from the income and then the income tax computation takes place.
I am confused as to why 900( gross 1125) is not added to the 20% tax basic rate band.
thanks.
It is not a trick question – the official rate of interest IS 2.5% for 2018/19 but unfortunately I have missed updating the figure of 3% from 2017/18 – my apologies for confusion and rest assured there will be no trick questions in the exam!
In respect of your second query you need to look back at your notes and lectures for chapters 2, 9 & 10 that clearly identify the difference between PERSONAL pension contributions and OCCUPATIONAL pension contributions!
Personal pension contributions extend the band limits whereas occupational pension contributions made by an employee are allowable deductions in determining the employment income assessment of the individual to include within the income tax computation
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