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Hi,
The question i am referring to is Chapter7-Example 3. In the answers section, where you have provided Options1/2/3/4…..in option 1 for instance, i am querying as to why only £28375 has been charged at 20% and £16125 has been charged at 40% where upto £37400 could be charged at 20%?
Many thanks for your help
This is because you are saving tax. If we didnt carryforward the loss the taxable income would be £53525 and would be taxed £37400 at 20% and £16125 x 40%
If we then reduse the trading profit by £44500 the taxable income will be £5525 and will be taxed at 20%. So you are saving £16125 x 40% the rest of the loss will save at 20%
Hope that helps
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