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F6 December 2013 (UK).
Question #3 (b) (ii)
the answer on the ACCA website is 6,405 which reflects the husband not using his AEA initially, instead paying a full 28% on 114,800.
was he not entitled to the AEA?
could you break down this simply for me?
thankshi chappy,
This is done by differential method where we only calculate savings.
1. its not so as you think that husbands annual exempt amount not utilized, it will be utilized. we are not calculating husbands cgt rather we are calculating savings.
saving no 1: if the 10600 amount had been paid under husband only assessment then he would have paid 28% on it while under wife she paid nothing on it , as it is her annual exemption. Hence saving of 28%
saving no 2: upto 34370 i.e basic rate band she will pay 10% had this amount paid under husband he would have paid 28% (higher rate payer) while under wife she will pay 18% so differential of 10%.
there is still remaining tax to be paid and will be paid but there is no saving in it. which means it will be paid at 28% by wife also.
Hope you got the meaning, what I am saying.
conclusion: they prefer differential method because time given is brief so if you calculate in full you wont be able to solve whole paper.
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