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Introduction to Income Tax Computation – ACCA Taxation (TX-UK) Exam FA2019

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  4. Dear Sir,
    As you explained in the lecture that if “Other trading losses” increase the non-savings income then the remainder will move to saving income. And if it increase the saving income then it will move to dividend. What if it increases dividend income as well? where it will go then?

    • According to BPP- Income Tax Liability is the amount of tax charged on the Individual’s taxable income.

      Income Tax Payable is the balance of the Income Tax Liability still to be settled in cash.

      If you find any better explanation please share.

    • The two seem the same as you said. however, they are clearly distinct.
      1. Tax Liability is the total taxable liability computed for a taxpayer based on his/her total sources of income after deducting all allowable reliefs and allowances. Its obtained by applying the relevant tax rates of the net income of the taxpayer.

      2. Tax payable is the residue of the total tax liability that was not yet paid by the taxpayer. This happened usually where a portion of tax has already been deducted at source from the taxpayer’s taxable income. Examples are the withholding tax on dividends and interest as well as the PAYE deducted from the employees’ salaries.

      Kindly endeavour to share any other explanations you might get contrary to this view.

      Thank you.

  7. Dear Sir, i am very confused with this Income Tax, as i have confirmed with many other working friends whereby they do not have to submit this income tax return. Therefore, what is the purpose of learning to compute this income tax return since employees do not have to prepare/submit this tax return, please note that employees will have PAYE whereby HRMC will compute and deduct the tax accordingly. so what is the purpose of having to learn this income tax computation and who will prepare this income tax computation since employees in the UK do not have to submit this. please advise, thank you

    • You are right, employees do not submit income tax returns but they are submitted by self-employed people or partners in a partnership business. People also submit income tax returns if they received rental income or foreign income or income from savings, investments or dividends. Many people pay accountants to calculate their income and submit their tax return to the government. I’m not sure if I am allowed to post links in the comments but you can search on google “Self assessment, who must send a tax return – gov uk”.

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