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Reducing/lowest amount of payments on account

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Reducing/lowest amount of payments on account

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Tax Tutor.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 28, 2018 at 2:29 am #454333
    dimeroglev
    Participant
    • Topics: 9
    • Replies: 5
    • ☆

    Hello,
    Whats the difference in calculating these?

    Q1: Eva’s income tax and class 4 NIC for 2017/18 = 4840
    for 2016/17 = 6360
    What’s the lowest amount to which Eva could make a claim to reduce each of her payments on account for 2017/18 without being charged interest?

    Answer: 4840/2 = 2420.

    Q2: Zhi’s income tax and Class 4 NIC are, or are of forecast to be:
    2014-15 2015-16 2016-17
    Inc.tax liability 25200 27600 18000
    Class 4 NICs 4084 4204 3724

    Calculate the amount to which Zhi can claim to reduce his self-assessment income tax and NICs due for payment on 31 January 2017 without incurring interest or penalties.

    Answer:
    For 2016/17:
    Current POA (27600+4204) * 50% 15902
    Revised POA(18000+3724) * 50% (10862)
    ————
    Reduction 5040

    So Why question 1 isn’t calculated like this: 6360 * 50% = 3180
    4840 * 50% = 2420
    ——-
    Reduction 760
    …what am i missing? is it because there is a reduction in POA only when expected liability is lower and in q1, the income tax and class4 NIC liability is already calculated?

    Or is it because a the POA can be in full amount of the liability, but lowest half of it?

    June 3, 2018 at 4:21 am #455659
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Are you sure you have read the precise question asked correctly as in Q1 we have computed the lowest amount TO which the payments can be reduced whereas in Q2 we have computed the amount BY which the payments can be reduced

  • Author
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