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Income Tax Computation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Income Tax Computation

  • This topic has 4 replies, 3 voices, and was last updated 7 years ago by Tax Tutor.
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  • November 22, 2017 at 11:54 am #417391
    cpamoses
    Member
    • Topics: 2
    • Replies: 5
    • ☆

    Hi Tutor,
    Refer OT June 2017-March 2018 Lecture Notes, Chapter 2,
    Example 9
    On computing income tax on Savings income whose taxable income is £40,000. I do not understand the logic of taking (£150,000-130,000) which falls in Non-saving income and later (£40,000-20,000). Instead of taking £40,000×40% ONLY?

    November 22, 2017 at 3:14 pm #417423
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    The higher rate band limit is 150,000 over which additional rate is payable at 45% – the non savings income is 130,000 leaving only 20,000 of the higher rate band available for the savings income to be taxed at 40% and putting the remaining 20,000 into the additional rate band which is therefore taxed at 45% as shown

    November 23, 2017 at 11:26 am #417565
    cpamoses
    Member
    • Topics: 2
    • Replies: 5
    • ☆

    Thank you so much for your clarification

    December 9, 2017 at 3:22 am #422156
    ravacca
    Member
    • Topics: 0
    • Replies: 4
    • ☆

    Hi Tutor,

    For Accrued income scheme, exam tip says consider saving income NIL rate band.

    Is is that the interest from securities can only be relieved with savings income NRB or would it be covered by the savings £5, 000 Starting rate band also? 

    If interest on securities is £7,000. and its a basic rate tax payer with only interest income from the security. 

    How much relief would this tax payer get.  Would he get £5,000 starting rate band, NRB £1,000. or both? 

    Thanks 

    December 10, 2017 at 9:16 am #422375
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Just treat the accrued income assessment like any other interest income and therefore apply both the starting rate band and the Savings income nil rate band where they are applicable

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