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Finance Act – Tax planning for Marriage couple.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Finance Act – Tax planning for Marriage couple.

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Tax Tutor.
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  • Author
    Posts
  • April 3, 2021 at 5:19 am #615793
    Yong
    Member
    • Topics: 16
    • Replies: 15
    • ☆

    Dear Tutor

    Based on the example below; Is the tax liability $3,600.00 correct for this question.

    EXAMPLE 6
    Samuel and Samantha are a married couple. For the tax year 2020-21, Samuel will have a salary of £90,000. Samantha will have a salary of £30,000 and savings income of £1,500.

    Samantha is a basic rate taxpayer, so her savings income nil rate band is £1,000. The remaining £500 of her savings income will be taxable at the rate of 20%.

    Employment income $30,000.00
    Saving income $1,500.00
    Personal allowance (12,500.00)
    Taxable income $19,000.00

    Income Tax
    $17,500.00 20% $3,500.00

    $1,000.00 0% $-
    $500.00 20% $100.00

    Tax liability $3,600.00

    Samuel is a higher rate taxpayer, so his savings income nil rate band is £500. Transferring sufficient savings to Samuel so that he receives £500 of the savings income will therefore save income tax of £100 (500 at 20%) for 2020-21. – I dont get this, how would it help to save Samuel income tax?

    April 13, 2021 at 10:56 am #617380
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Firstly my apologies for delay in reply.
    The tax liability for Samantha will be 3,600 but the saving in tax will be for the married couple rather than Samuel – by moving £500 of income taxed at 20% in the hands of Samantha to being taxed at nil rate for Samuel
    As regards what is the correct answer to the question – you have not stated the precise words of the question – so I am only able to comment on the specific queries you have made about it.

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