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Why don’t we take off the PA of 11000 from the 31000 to leave 14000 of basic rate left for the CGT is that because it states its her taxable income??
30 Cheryl
£
Chargeable Gain 40,000
Less: AEA (11,100)
Taxable gains 28,900
Capital Gains Tax (W1) £5,480
Due 31/1/2018
(W1) Basic rate band remaining
£32,000 + (£1,600 × 100/80) = £34,000 – £31,000 = £3,000
£
3,000 × 10% = 300
25,900 × 20% = 5,180
28,900 5,480You have answered your own question – it is exactly because you have been told that TAXABLE income is 31,000 which as you should absolutely know is after deducting the PA – this is a real issue now that we have so many MCQ that you have to be very careful about reading the information in the question and correctly interpreting it as with a MCQ you either score all the marks or no marks!
Plenty of question practice will ensure that you get better on this issue – but again do take time to properly read those MCQ’s as there will be answers shown that reflect the typical mistakes made by the unwary student!
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