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i have seen the most asked query in the comments that why 1000 is taxed at 0%..so the answer is that, there would be no concept of nil rate band apply here since the 5000 rental income is classified under non-savingincome so the question arise why the teacher taxed 1000 at 0% .the answer is teacher did not apply nil rate band here.
Now think like that
net income of wife =15000 in which 5000 is rental income according to 50-50 rule
less personal allowance =(11000)
taxable income=4000
so the 1000 taxed at 0% means that it is deducted from personal allowance.hope u people get my point.
Hi, I understand the process, but if Rental Income is Non-Savings why does the Husband have 1000 of the rental income taxed at 0%?
This is just for Savings Income normally no?
Sorry I understand!!
Hi,
I am still confused with this calculation. Please elaborate it?
hi Lorna,
the 1000 taxed at 0% relates to the balance of the PA 🙂 . husband had earning of 10k, PA available was 11k, 10k NS income was taken off that 11k leaving 1k availabe to be deducted when husband took over ownership of wife’s property
Yes, I have the same question as Agnieszka. Why £1000 of property rental income is taxed at 0%? Should both £4k from Salary income and £5k of rental income be taxed at 20%?
Hi Anna,
Think about like this:
After P.A. of 11k, there is 4k tax liability payable, this is going to be at basic rate @ 20%.
Since we know that, the 5k is included and as part of the total income. We could think it as, out of the 5k, 4k is to be taxed, which implies that the 1k is going to be taxed at 0%.
Best wish
Harry
Had the same doubt. Thank you for your comment, Now I get it!
Hi, perhaps I am missing the obvious here however I couldn’t get my head around as to why £1,000 is charged @ 0% out of £5,000 net rental earned by Husband since we’ve used all £11,000 of his Personal Allowance. I reckon all £5,000 should be charged @ 20%. I’d be grateful for some explanation/clarification here. Thanks in advance.
sorry for above question, i got the answer myself. was really silly of me to ask that!
Since you understood it, can you please explain it to me? Thankyou
in the example of H and W shouldn’t W be getting 500 at 0% and rest remaining at i.e 4500 at 40%??
I believe you’re talking about the £500 savings nil rate band available to higher rate tax payers?
Rental income is classed under non-savings income and therefore the savings NRB is not applicable to the £5000 income she receives. Hence why the full £5000 is taxed at 40%
Why £1000 is covered by PA in we used all £11 000 of PA ? £1000 shouldn`t be taxed at 20% ?