Hi Sir,
I would like to ask for personal income tax, if he earns a salary of 9,000 and receive bank interest of 5,000, personal allowance is 10,000, what happen if the personal allowance is greater than the salary? does it make the taxable income as the ones from bank interest only?
ACCA Forums
TXPersonal allowances
Salary is considered non savings income. Bank Interest is savings income but the 5000 is received NET 20%. Gross amounts are always included in the computation. So 5000 x 100/80 to give 6250.
Net Income = 9000 + 6250 = 15250
Take away the Personal Allowance of 10000. Use all from Non Savings Income (Salary) and the rest from Savings Income (6250) You would only need 1000 from Savings income.
Taxable Income for Non Savings is 0
Taxable Income for Savings is 5250
There is a special starting rate band for savings income if non savings income is less than 2880.
Non Savings = 0
Savings = 5250-2880 x 10% = 237
= 2880 x 20% = 576
Dividends = 0
Total IT liability = 813
Less: IT suffered at source (Bank Interest) = 1250
IT repayable = 437
Thanks a lot for the explanation. understood now.
Also the personal allowance is 10600 not 10000
@allnamesaretaken said: Also the personal allowance is 10600 not 10000No for FA2014 exams it is £10,00 not £10,600
Sign in to reply to this topic.