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Hi, I don’t understand why the answer does carryback first and then carryforward?
The carryback relief has to offset the net income of £42200 in 09/10 and the personal allowance will be wasted. Secondly, david will be a higher rate taxpayer in 11/12. If it doesn’t do carryback first and just does carryforward, in 09/10, 42200-6475=35725 and in 11/12, £60000-£48000=£12000 and 12000-6475=5525. Therefore David will only be a basic rate taxpayer for all 3 tax years.
Many thanks.The question says all beneficial claims. Carry back results in a repayment so this is beneficial. The dilemma is cash-flow versus saving at the highest tax rate. As you state carry forward results in a higher tax saving but there is a time delay to receive this benefit. That is the issue so you would discuss this. In my answer it is beneficial from a cash-flow perspective
Hope this helps
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