hello,
Basically, fast forwarding to 38 minutes on example 1 video, when calculating non savings income, do we have to use the basic rate all the time like its done in the example if the taxable income exceeds the basic rate.
for example, if the taxable income was to be 150500 will I calculate as:
basic rate – 31865 X 20% = 6373
additional rate – 144127 X 45% = 64857.15
Thank you
Ask the Tutor ACCA TX-UK
INCOME TAX COMPUTATION EXAMPLE ONE
I think you need to carefully read the OT course notes in this section and watch again the lecture as their is a clear progression of tax rates. As taxable income exceeds the basic rate band limit of £31,865 then, if it is non savings income, it is taxed at the higher rate of 40% before then moving to additional rate of 45% when taxable income exceeds the higher rate band limit of £150,000
hi,
in the calculation of the higher rate band do i subtract 31,865 from the taxable income and then calculate 40% on the difference.thank you.
Look at the examples and the answers along with the lecture - these points should then be obvious from the material you have in front of you.
Sign into reply to this topic.