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0% starting rate band

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › 0% starting rate band

  • This topic has 4 replies, 2 voices, and was last updated 7 years ago by Tax Tutor.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • November 4, 2017 at 4:19 am #414260
    nitint
    Participant
    • Topics: 25
    • Replies: 26
    • ☆☆

    Hello Sir,

    I see that nil rate band of both savings and dividend income counts towards basic and higher rate threshold but not sure if the treatment is same for 0% starting rate as well?

    For example, if you could kindly illustrate the working of tax liability in the following two cases separately:

    1. If a taxpayer has say £60,000 of savings income and £40,000 of dividend income (both net income figures)?

    2. If a tax payer has say £7,000 of savings income and £60,000 of dividend income (both net income figures)?

    Thank you Sir in advance.

    Regards,
    Nitin

    November 5, 2017 at 11:11 am #414408
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    There are several examples in the OT notes and lectures that illustrate the use of the tax rates – please ensure that you thoroughly review
    In your examples you have made no mention of non savings income

    November 9, 2017 at 9:57 am #414969
    nitint
    Participant
    • Topics: 25
    • Replies: 26
    • ☆☆

    I have intentionally ignored Non-savings income in the above two cases. You can consider the above figures as Taxable income instead of Net Income to avoid the hassle of PA calculation.

    Request your guidance Sir.

    November 9, 2017 at 6:31 pm #414965
    nitint
    Participant
    • Topics: 25
    • Replies: 26
    • ☆☆

    I have solved all the problems and practice questions but could not get a problem similar to the above hence this request.

    I have intentionally ignored Non-Savings income in these 2 examples.

    Your guidance will be really appreciated.

    November 11, 2017 at 3:05 pm #415270
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Yes – the 0% starting rate band WILL count towards the basic and higher rate band limits.
    The 0% starting rate band will not however be relevant in your 2nd example as the PA will reduce the 7000 savings income to nil taxable income

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