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Chapter 2 – Income tax computation

VIVA

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Comments

  1. AlaaEid says

    March 9, 2024 at 12:57 am

    hi,
    are those lectures ok for June 2024

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  2. Hamed.salimi.c@gmail.com says

    January 27, 2024 at 2:54 pm

    Hi, I would appreciate it if you shared the link to the practice exam for TX.

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  3. teejanzen says

    January 8, 2024 at 1:36 pm

    May I know how shall i get $12,570 in Lecture 1 Example 1?

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  4. damiloladeyemi247 says

    November 30, 2023 at 1:01 pm

    Please how do we arrive at 22,270 @ 20% for Example 3 when calculating the Tax liability

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    • sudhirb says

      December 13, 2023 at 3:52 am

      Non Savings Income – 14930 + Savings Nil band rate 500 (because income exceeds 37,700) = 15430. Balance available in Basic rate is slab is 22,270 (37,700 – 15,430)

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  5. Kabby says

    November 19, 2023 at 5:04 am

    In the solution for practice question 1, why was the remainder of the Dividend thus: 5000.00 divided into Basic rate and higher rate instead of just using the high rate of 33.75%

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  6. shari993 says

    October 20, 2023 at 4:34 pm

    Is there an error I’m example #2? The non savings taxable income of £14,930 exceeded £5000 therefore the savings nil rate band should not be applicable. I’m confused.

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    • stvincent89 says

      November 5, 2023 at 6:42 pm

      Exactly the question I had as well.

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    • mrjonbain says

      November 8, 2023 at 3:26 pm

      I am not in a position to watch the lecture at the moment. However, it is TAXABLE non savings income that can’t be over £5000. If it is over this limit then the savings stater rate is wiped out. See following link for details-

      https://www.gov.uk/apply-tax-free-interest-on-savings

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    • J8542 says

      November 11, 2023 at 10:16 am

      The £1,000 deducted is based on this rule (2):
      For basic rate taxpayers, the savings income nil rate band for the tax year 2022-23 is £1,000,
      and for higher rate taxpayers it is £500. Additional rate taxpayers do not benefit from any
      savings income nil rate band.

      The one you got confused with is this rule (1):
      Savings income benefits from a 0% rate. However, the starting rate only applies where savings
      income falls within the first £5,000 of taxable income. If non-savings income exceeds £5,000,
      then the starting rate of 0% for savings does not apply.
      Savings income in excess of the savings income nil rate

      If you look at Example 4, might have a better understand, if rule (2) applies, the taxpayer would get a £5,000 deduction.

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      • mrjonbain says

        November 11, 2023 at 12:09 pm

        J8542, I have not watched the video. I suspect you are right in the main. However, you are wrong when you say if non-savings income is greater than £5000 that the savings starter rate does not apply. I will quote directly from government site from link I gave above-

        “If your other income is less than £17,570

        Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

        Example

        You earn £16,000 of wages and get £200 interest on your savings.

        Your Personal Allowance is £12,570. It’s used up by the first £12,570 of your wages.

        The remaining £3,430 of your wages (£16,000 minus £12,570) reduces your starting rate for savings by £3,430.

        Your remaining starting rate for savings is £1,570 (£5,000 minus £3,430). This means you will not have to pay tax on your £200 savings interest.” If TAXABLE non-savings income is greater than £5000 the savings starter rate will be unavailable.

      • J8542 says

        November 11, 2023 at 6:13 pm

        mrjonbain, I copied the text straight from the manual. And I believe we are both correct.

        “the starting rate only applies where savings income falls within the first £5,000 of taxable income”
        In order to have a taxable income of £5,000:
        £12,570 (personal allowance) + £5,000 which is £17,570.

        To be more accurate, the text that I quoted could be “If taxable non-savings income exceeds £5,000, then the starting rate of 0% for savings does not apply.”

        Thanks for your input, I have a better understanding now 🙂

  7. cynthiahylary says

    October 2, 2023 at 3:01 pm

    Hi there ,the working of example 6 part 2 ( the example that has Daisy), if possible, i would like to know how the 230GBP and 12,270 came to be?

    thank you in advance

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  8. FatimaNazir says

    September 15, 2023 at 6:52 pm

    In example 13, how will Elliot benefit? If the tax band hadn’t been extended to 39700, she would be paying 7540 but with increased band she will be paying 7940. That’s a 400 pound increase in tax liability.

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  9. samiullahrabnai says

    July 22, 2023 at 7:07 am

    In example number:
    14
    Adjusted net income exceeds 125,140 and
    15
    Adjusted net income exceeds 100,000
    Why there is a difference it should be the same as the example number 14/ £ 125,140.

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  10. Farwazahra says

    July 19, 2023 at 6:53 pm

    hello
    in example 16 (Elton and david) david’s tax liability becomes nil when he uses his personal allowance (10000-12570=nil), so why doesn’t elton also use his personal allowance to be rid of his liability i.e. his 10000-12570…?

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    • Amoury says

      September 13, 2023 at 11:41 am

      The election is only available when both taxpayers are either
      just basic rate taxpayers or non-taxpayers. The election is only likely to be made when one spouse is
      a non-taxpayer and has an amount of unused PA that would otherwise be wasted and the other
      spouse is only a basic rate taxpayer.

      Given that Elton is a higher Tax Payer, this election isn’t possible

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  11. chughtai20 says

    July 19, 2023 at 9:00 am

    What is the admin chapter the tutor keeps referring to ? I studied the first chapter and I didn’t see any p60 or p11d.

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  12. incepaul says

    July 2, 2023 at 8:13 pm

    Tax will provide you with a good foundation – but you fill find the ATX syllabus has a lot more content. I would suggest investing in some learning content as well as revision kit.

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  13. Andrea says

    June 23, 2023 at 10:07 pm

    Hello – Is there any reason why I cant see the lectures? I’m just starting on lectures chapter 2

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    • opentuition_team says

      June 24, 2023 at 8:39 am

      No idea, try another browser or device, video works fine

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    • dheeramungur says

      June 26, 2023 at 1:10 pm

      Yes it’s blur when opened on laptop however on Mobile it’s clear

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  14. roshpatel says

    May 12, 2023 at 2:54 pm

    Hi,
    In practise question 1 – Kate.
    how did we get the £2,270 x 8.75% for dividends?

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    • akazakov says

      May 16, 2023 at 1:01 pm

      8.75% rate is applicable up to the BRB limit of £40,200 (refer to W1). Look at the “Income Tax” computation section in the answer and add up all income above and including £2,270, you will get £40,200 in total. The remaining part of the dividend income is taxed at the higher rate.

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      • Sanjee says

        January 17, 2024 at 3:39 pm

        Thanks, was wondering how to get that amount.

  15. sabazareem says

    May 4, 2023 at 8:34 pm

    In Example 12, after applying basic tax rate of 20% on 37700, we didn’t apply nil rate band (500 @ 0%) as Kathy is a high rate tax payer

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    • SabaZareem says

      May 4, 2023 at 8:44 pm

      Sorry i got that. No savings income

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  16. Naseam says

    March 13, 2023 at 9:39 pm

    Question 3 of the practice questions – my income tax liability came to 56,638?

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    • jealogy says

      November 2, 2023 at 10:57 am

      I got this too. Must be a typo or something since 56,638 is indeed the sum of everything on Practice Answers.

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  17. Shub says

    March 11, 2023 at 3:28 pm

    Hi Mam,

    I am planning to sit for ATX-UK next. Since the lectures of ATX are not available, I am planning to watch lectures for TX-UK and then solve revision kit for ATX-UK. Just needed your guidance if I am on the right path.
    Thanks for the lectures.

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    • incepaul says

      July 2, 2023 at 8:13 pm

      Tax will provide you with a good foundation – but you fill find the ATX syllabus has a lot more content. I would suggest investing in some learning content as well as revision kit.

      Log in to Reply

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