Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Income Tax
- This topic has 2 replies, 3 voices, and was last updated 11 years ago by Tax Tutor.
- AuthorPosts
- November 23, 2013 at 3:56 pm #147525
Sarah’s income for the year:
Trading profit- 164,000
Bank interest recieved- 8,000
Dividends recieved- 4,950.Sarah paid 16,000 (net) into her personal pension scheme.
Calcluate Sarah’s income tax liability.
***************************************************************
So sarah’s total taxable incomoe is 179,500
and will be taxed as follows:-
NSI- 54,370@20%
109,630@40%SI 10,000@ 40 %
DI- 5,500@ 32.5%.
Right?
The answer in the kit charges SI at both 40% and 50% (6,000@40% & 4,000@50%)
and the DI as 5,500@42.5%.Can someone kindly explain me why?
Thanks.
November 23, 2013 at 6:48 pm #147538The gross amount of personal pension contribution not only extend the basic rate but also the higher rate band.
Now that the new extended higher rate band is £170000, £6000 of the SI ll be taxed at 40% (£164000 + £6000 = £170000)
and the rest at 50%.November 24, 2013 at 3:48 am #147560oogabooga is correct about the extension of the higher rate band as well as the basic rate band which also has the effect of putting the dividend income into the additional rate band so that it is then taxed at 42.5%.
- AuthorPosts
- You must be logged in to reply to this topic.