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question theory

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › question theory

  • This topic has 7 replies, 2 voices, and was last updated 8 years ago by Tax Tutor.
Viewing 8 posts - 1 through 8 (of 8 total)
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  • January 16, 2017 at 6:56 pm #367742
    Jean96
    Member
    • Topics: 77
    • Replies: 67
    • ☆☆

    Q Philips and charles are father and son . The following information is available for the tax year 2015/16
    philip wind
    philip retired early at the age of 55 . During the tax year 2015/16 Philip received pension income of £13500 and building society interest of £14600(gross amount).

    charles wind
    charles is self-employed and his tax adjusted trading profit for the year ended 31 december 2015 was £109400

    during the tax year 2015/16 charles made a gift aid donation of £800(gross) to a national charity

    charles has been a member of a registered personal pension scheme since May 2013 .
    He made a gross contribution of £25000 in the tax year 2013/14 but has not made any subsequent contribution

    Q 1 If charles had made a payments of £6880 into a personal pension scheme during the tax year 2015/16 which of the following statements are correct?

    (1)His basic rate band for the tax year 2015/16 would have been £40385

    (2)His taxable income for the tax year 2015/16 would have been reduced by £8600

    (3) HM Revenue and Customs would have paid £1376 into the pension fund on his behalf

    (4) His tax liability at the 40% rate would have been £3440 lower in the tax yeatr 2015/16

    ans 1 & 4 how did it get answer 4

    January 16, 2017 at 7:33 pm #367756
    Jean96
    Member
    • Topics: 77
    • Replies: 67
    • ☆☆

    could u show working please

    January 18, 2017 at 9:52 am #368124
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Show me your answer please

    January 18, 2017 at 4:30 pm #368199
    Jean96
    Member
    • Topics: 77
    • Replies: 67
    • ☆☆

    the answer is 1 and 4 but i dont know how they work out 4

    January 18, 2017 at 4:31 pm #368200
    Jean96
    Member
    • Topics: 77
    • Replies: 67
    • ☆☆

    could u help me plz

    January 19, 2017 at 9:39 am #368287
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    I saw your post on the exam results forum for F6 and I have written a note on the same forum to try and help students who like you have had a disappointing result. It also suggests that where a mark such as yours was scored there are fundamental knowledge problems that exist which require you to go back to the lectures and notes provided.
    For the last sitting you asked a considerable number of questions many of which were about past exam questions but what you were asking identified that you did not understand the basics of the topic being tested – I suggested then and I suggest again now that if you are to succeed in this exam you must improve your basic knowledge by reference to the lectures, notes and examples provided and only then attempt past exam questions – you are trying to run before you are able to walk!
    In reference to this example what I wanted to see was how you attempted it, to identify the problems that you have, so please do your answer to this – we know it will be wrong but I need to see what you are doing to be able to put you right!

    January 19, 2017 at 7:19 pm #368400
    Jean96
    Member
    • Topics: 77
    • Replies: 67
    • ☆☆

    actual
    trading profit 109400
    personal allowance 6300
    taxable income 103100

    income tax
    32585*20%=6357
    70515*40%=28206
    it liability =37403

    new
    trading profit 109400
    pa 10600
    taxable income 98800

    income tax
    40385*20%=8077
    58415*40%=23366
    income tax liability=29723

    January 23, 2017 at 10:23 am #368947
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Thank you for showing your answer. In the first part of your answer you have correctly computed the revised PA and extended the BR band for the gift aid payment. With the inclusion of the gross PPC of 8,600 you have again correctly computed that the PA will remain at 10,600. The issue, however then is about both your calculation of the extended basic rate band and from what you tell me is also the model answer calculation!
    Your answer and also option 1 in the question is 40,385 – which is of course 31,785 + 8,600 – but this ignores the gift aid payment of 800 gross so is wrong as far as the question info that you wrote above is concerned.
    As far as the other answer (option 4) is concerned then that is simply the gross PPC of 8,600 extending the BR band and therefore removing 8600 from higher rate band at 40% = 3,440

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