INCOME TAX BAND EXTENDING

Thomas earned £160,000 trading profit in 2023/24 In the tax year he paid £6,400 to charity under the
gift aid scheme.
Calculate Thomas’s income tax liability for 2023/24.

HI I FOUND THIS QUESTION IN THE NOTES OF TX FROM OPENTUTION WHAT I DONT UNDERSTAND IS THE ANSWER GIVEN IN THE NOTES

Answer to Example 12
Thomas Income Tax Computation 2023/24
Income Tax Calculation
Even though it is obvious that PA is not available – NEVER ignore it – always explain either with a
calculation or a sentence:
The PA is reduced to nil as the adjusted net income exceeds £125,140.
(W2) Gross gift aid extends both rate bands:
BRB: 37,700 + (6,400 × 100/80) = 45,700
HRB: 125,140 + (6,400 × 100/80) = 133,140
(W3) 133,140 – 45,700 = 87,440
Easy marks in this exam for showing the rules, applying the rules and showing ALL calculations.
Non
savings Total
£ £
Trading income 160,000 160,000
Total Income 160,000 160,000
Less: PA (W1) (–) (–)
Taxable income 160,000 160,000
Non Savings
(W2) 45,700 @ 20% = 9,140
(W3) 112,300 @ 40% = 44,920
2,000 @ 45% = 900
160,000
Income Tax Liability 54,960
(W1) Net Income 160,000
Less Gross gift aid payment (6,400 × 100/80) (8,000)
Adjusted Net income

HERE I DONT UNDERSTAND THE WORKING 3 WHY DID WE USE ADDITIONAL RATE BAND ON 2000 WHEN WE HAD CAPACITY IN HIGH RATE BAND??