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There’s a few figures I can’t understand where they came from.
In the question the official rate of interest is 3% but 2.5%was used for the loan interest.
Also I get my calculations for the employment income to £50036 same as the answers but then in the income tax computation the answer sheet uses £49513 as the employment income. I can’t work out where this has come from.
Lastly why is the pension amount not used to increase the tax bands (33500 + (900×100÷80) )
I thought gift aid and pensions increased the tax bands :/Thank you so much for your efforts.
It is an updating error from last year – the tax calculation had not been revised for FA 2017 rates – this should now have been amended in the notes. Likewise the official rate of interest was 3% last year but is 2.5% this year! The question still needs to be amended to 2.5% – thank you.
Regarding the pension contributions go back and study the OT notes! The rate bands are only extended when personal pension contributions have been paid not when the contributions are into an occupational scheme as in this question, where the contributions will be deducted from the employment income assessment to be included in the taxable income figure
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