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Income tax computation – Personal allowances
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Please do we add PA to income when it is below 100,000 pounds?
Has the PA changed to GBP 11500 ?
https://www.gov.uk/income-tax-rates
yes It has been updated for Tax Year 2017/18. But if you are appearing for march 2018 . you have to use the tax rate of Tax Year 2016/17.
Can someone tell me why the 40k bank interest is split at 40 and 45% please?
As per Income tax rate various rate
So upto 150000 Use 40%
and above 150000 use 45 %
Hello,
In personal Allowance there is rule that in above拢 122000 than personal Allowance is not available.so why we calculate that 50%rule
The answer of question 9 is incorrect. This is due to error in computation of tax on dividend.
31,000 @ 38.1% is NOT 11,181 but 11,811. Therefore, the correct answer would be 拢74,411.00 ( I think)
yup
also in example 5, there is a minor error
didn’t add 2600+200, to give 2800 as the total…
kindly correct it ‘opentutuion’,
Thank you for the lectures and notes…!
It’s much better when you started showing the tutor… 馃檪
i thot so true was a bit confused
Hi Tutor,
For Example 9, does the 500 nil rate band applied for non saving income ? I got 74,211 same as the answer book but the nil rate band is not applied in the answer book and the answer is still 74,211.
Please clarify how the nil rate band of 1000 and 500 from non saving is applied.
Thanks
Daniel.
Hi Daniel,
It is not applicable as it’s additional rate. The answer is incorrect.
Best wishes
Harry
For the example9 – I got the answer of 74,411/ how is it 74,211/ shown in the answer at the back of the notes.
the same 馃槈
Hi,
Was attempting example 8 of chapter 2. For the tax liability of non savings income shouldn’t the first 拢500 be taxed at 0%? In the answers it doesn’t show that this has been done.
Hi Guys
Just to let you know, in case if one spouse elects to transfer his/her personal allowance, the allowance transferred will be 1,060. And the spouse who chose to transfer the personal allowance will be left with a personal allowance of 9,540 for deduction. In case if the Adjusted Net income exceeds 9,540 it will be taxed at the basic tax rate.
This was bothering me from the workings of example 12. I thought someone else might have the same question, therefore, I posted a comment for information.
What is the point of 20% of 1060. Why can’t they just say that you can take 212 from your spouse’s PA?
Oh I got it. That 212 tax credit has the same effect as increasing the PA as 10600+1060=11660 and if they just do that, it will be less confusing and straight forward.
In Example 9, How is savings split up into 20,000 each. Can you explain Please?
Hi Munaiza,
For the higher rate band, 40% is charged for income less than or equal to 150,000. So, if you add the Non-savings income of 130,000 and 20,000 for savings it gives a total of 150,000.
Therefore, the remaining balance of 20,000 will be charged at the additional rate band of 45%.
Hope that helps
Surely only 拢600 will be transferable, otherwise the spouse would be taxed?
Under transferable amount of PA, What if the income of the spouse with the unused PA is 拢10,000. Do we still apply the whole of 拢1,060, considering the unused PA (拢600) is less than 拢1,060?
Yes Ronke, the whole 拢1,060 will still be transferable to the spouse.
If he/she isn’t transferring, the whole 拢10,600 PA will still be available (even tho income is 拢10,000) thereby leaving his taxable income at nil.
I also believe it is good for tax planning purposes if he makes a transfer to the spouse who earns way more than him since his income is low enough to be covered by the PA anyway.
Thanks Lanre!