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Chapter 2 – Income tax computation TX-UK FA2023

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  1. Thank you so much Miss Jill for teaching so well.
    I have a question on the use of gross donations. I noticed that it was deducted from the total income in some questions and it was not deducted in some others. In what cases do we deduct the gross donation from the total income to arrive at our our ANI?

    • Charity donation might affect PA. For example, if the income for the year is £105,000, PA would be reduced by £2500 (105k-100k * 0.5)
      But if the donation of 5k gross made, it would reduce ANI by 5k, hence ANI = 100k -> you get full amount of PA. Long story short, you need to keep donations in mind when calculating ANI, if income is in the 100-120k range.

      In all the other cases, donation amount is used to extend BR and HR bands to ensure no tax paid for the amount of the donation

  4. Hi,
    i want to ask that , due to the gift aid donations,the basic rate band will move above the orignal 37700 , for example, 40000 . Now , someone’s taxable income is 38700,(between 37700 and 40000), then ,would 38700 be considered basic income or high income?

    thank you!

  5. Hello,

    In the Lecture Notes I believe the answer to example 12 is wrong. (W3) shows that £87,440 should be charged at higher rate however the calculations are for £112,300. Am I missing something?

    Thank you very much in advance!

  6. Great. I am happy that I could solve final MCQ questions on my own with one little mistake with dividends rates (forgot they are different) at the end.

    You said there is plenty of time on the exam to even make full proforma.
    From what I see, Multiple Choice Questions (Sections A and B): 1.5 minutes per question. Are these will require to build full proforma? because I assume 1.5 minute could be not enough

  7. In ref to Example 5 and 6, The non savings taxable income in the ex. 5 did exceed 5000, then why was is that you applied the starting rate to the saving income? I’m still a bit confused about how the starting rate ties into the computation. could you please explain in more detail jill?

    • Hello Rohan.

      There is difference between Saving income starting rate band and saving income nil rate band.

      Savings income starting rate band should not exceed first £5,000.00 of the Total Taxable income which is tax at 0%. Ex: If the Taxable income for NSI exceeds £5,000.00 then there won’t be any SI starting rate band but only the SI nil rate band will apply. While the savings income nil rate band is £1,000.00 for basic rate tax payer and £500.00 for higher rate tax payer which are taxable at 0%.

  10. Miss Jill thanks for Ur efforts and good explanation this Netting Technique is very very nice and really helpful in AR band questions i mean Ur all techniques are fabulous particularly NETTING one

  11. Hi,
    Thanks for the clear explanation of Tax subject.

    In example 13

    I want to ask if the saving in self is $4000 so in itself it is low rate but because of the calculating the non-saving it jump in the high rate .
    So is it because of that we have to consider it a high rate .
    So in calculating the income tax it is like accumulating the taxable amounts from the non savings till the dividends column.
    So we don’t have to consider each column of the taxable amount as separate calculation from each other?

    Can you please clarify.

    Thanks

    Thanks,

  12. Hi,

    Chapter 2, Part 6, example 8 at 1:40min on the lecture.

    Shouldn’t the £450 “interest from ISA” be included under Savings Income and deducted before reaching to the Taxable Income amount?
    The reasoning is that if we just mark it as exempt but don’t add a figure in front, it would be as if that income stream never existed.
    Would it be wrong if I did this?

    Thank you.

  13. Hi I have a question for part 9 – MCQ1 – about 11’40” in to the video – there is mention of taxable income being £106,800. It doesn’t say trade income, or employment income, but taxable income, which should include the dividends. And yet, when the ANI is calculated, the dividends are added to this taxable income before the gift aid is deducted. This confused me a bit. Am I wrong here? Thank you!

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