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Practice question no. 2 KATE
Non-saving savings dividend total income
Taxable income 32800 3500 7000 43300How to calculate income tax calculation for non-savings?
They have given gift aid amount 2000.
if we calculate it like 32000+(2000×100/80)= 34500
this is more than non saving.I have seen this question solution but couldn’t get it. i understand the dividend part i.e: 5000×0%=0 and remaining 2000×32.5%=650. I am confuse with non-savings and savings. can you please explain this to me?
May I ask if you have worked through the lectures and OT notes on chapter 2 where equivalent examples are to be found?
Yes i had worked through your lectures and notes too and did practice test question 3 4 5 6. Just having problem in Q2
Then you should be aware that the gross gift aid payment simply extends the basic rate band and if necessary the higher rate band, You then compute the tax liability in entirely the normal way taxing non savings income first, followed by savings income and finally dividend income applying the relevant tax rates as normal depending on the type of income and whether it falls into the revised basic or higher rate bands. The answer shows the workings and the notes as to how the taxable income is taxed.
With regard to the Question number 4 KARL, is the answer of £13,458 correct? I am getting £ 7,933 of tax payable, total tax liability £56,453 less PAYE £48,520. Somebody help please? Not sure where I’m going wrong…
Yes there is an obvious typo on the updating – clearly 5,000 at 0% is zero NOT 5,525!!
Thank you for pointing this out and apologies if it caused confusion.
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