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Tax Tutor.
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Yong
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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 $19,000.00Income Tax
$17,500.00 20% $3,500.00$1,000.00 0% $-
$500.00 20% $100.00Tax 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?
Tax Tutor
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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.
Yong
Tax Tutor
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