Hello!
I am having problems to solve the following problems:
Margery has the following income after deducting the personal allowance: Non-savings=27.315; Savings=1.500 and Dividend Income= 10.000. The solution on the BPP Book gives the following answer:
Non-savings=27.315*20%=5.463
Savings=1500*20%=300
Dividend Income
(31865-27315-1500)=3.050*10%=305
(10.000-3.050)=6950*32.5%=2259
Tax liability=8.327
I would solve the same problem as:
Non-savings= 27.315*20%=5.463
Savings=1500*10%=150
Dividend income=10.000*10%= 1.000
Tax liability=6.613
The following question has the same problem:
Non-savings=148.000, Savings=6.250, Dividend=20.000
BPP Book answer:
Non-savings income
31.865*20%=6.373
(148.000-31.865)=116.135*40%=46.454
Savings income
(150.000-148.000)=2.000*40%=800
(6.250-2000)=4.250*45%=1.912
Dividend income
20.000*37,5%=7.500
Tax liability=63.039
I would solve as
Non-savings income
31.865*20%=6.373
(148.000-31.865)=116.135*40%=46.454
Savings income
2.880*10%=288
(6.250-2880)=3370*20%=674
Dividend income
20.000*10%=2000
Tax liability=55.789
Please help me!
I can´t figure out how to get to the book solution.
Ask the Tutor ACCA TX-UK
Income Tax Liability
You are of course wrong with your answer. I must ask the question have you worked through the OT notes and examples of Chapter 2 and/or listened to the lectures? I think you would not then be making the mistakes you are, of incorrectly using the 10% savings rate - which is only applicable where savings income is within the first 2880 of Taxable income which is clearly not the case where non savings income is bigger than that amount. You are also not applying the correct tax rate to dividends where they fall into the higher or additional rate bands.
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