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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?
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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