ACCA F6 UK lectures Download F6 notes
Income tax computation – Deductions from Total Income
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Hi. Many thanks for the informative and wonderful lectures. Just a short question. In eg 13 of the notes, the gift donation was not deducted from the total taxable income. In eg 14 and 15, the donation was deducted to give us Adjusted Net Income and, is then added to Basic and Higher Rate limits when calculating Tax. Is that how it’s done? I do find it a little difficult to understand the concept purely from a theoretical point of view. The examples make it easier. Many thanks for your kind response.
Hi Sifiso,
I am studying this course too at present. What I understood is that we deduct gift aid from taxable income in order to get adjusted taxable income. This number is used to work out an adjusted personal allowance for people on incomes more than 100000. In example 13 personal allowance is 11000 because the individual is not earning more than 100k. In other two examples they are and this calculation becomes necessary. Hope that helped.
Umer
If simply it is mentioned as donation instead of donation under gift aid scheme will the above process apply???
Is the tax liability for Thomas 56,000 pounds the answer to example 14?
Ma ans is 56100
Gift aid payment is treated as being paid net of basic rate of tax (20%). Please refer to your lecture note Chapter 2 page 13 before you continue reading.
To that effect, to obtain the gross amount paid to the charity , a grossing exercise of 100/80 is required.