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Income Tax Question from ACCA website (Example 2)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Income Tax Question from ACCA website (Example 2)

  • This topic has 2 replies, 2 voices, and was last updated 3 years ago by Tax Tutor.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • September 16, 2021 at 2:28 pm #635829
    kish200
    Participant
    • Topics: 24
    • Replies: 53
    • ☆☆

    Good Day
    I was practising the questions and came across this one:

    EXAMPLE 2
    For the tax year 2020-21, May has a trading profit of £159,000. During the year, May made net personal pension contributions of £32,000 and a net gift aid donation of £9,600. Her income tax liability is:

    The answer was:

    Trading profit
    159,000
    Personal allowance

    (9,000)
    ______
    Taxable income

    150,000
    ______
    Income tax:
    37,500 at 20%
    52,000 at 20%
    60,500 at 40%

    7,500
    10,400
    24,200
    ______
    Tax liability 42,100

    My question is, how come we didn’t include the nil rate band of 500 @ 0% for higher rate tax payers since the taxable income is 150 000 which is within the higher rate tax band?
    I have done all other calculations correctly except for adding in this nil rate band?

    September 16, 2021 at 2:54 pm #635831
    kish200
    Participant
    • Topics: 24
    • Replies: 53
    • ☆☆

    ***
    I have realised my mistake sir, this was only Non-savings income and not savings income.
    My apologies, what an error =(

    September 24, 2021 at 6:38 pm #636418
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Pleased that you were able to correct your own mistake

  • Author
    Posts
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