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In the tax year 16/17 Mane has taxable income (after deduction of his personal allowance) consisting of 3000p of non savings and 12500p of savings income. What’s his tax liability for 16/17?
My answer: 2900
BPP: 2500Where did I go wrong?
ThanksFirstly, if not done already I would advise that you read chapter 2 of the OT course notes and better still work through the OT lectures. The BPP answer I would have thought would come with calculations, but if not would be as follows:
NS 3,000 x 20% (basic rate) = 600
S 2,000 x 0% (starting rate) = 0
1,000 x 0% (savings nil rate) = 0
9,500 x 20% (basic rate) = 1,900It would appear that you have ignored the starting rate band – as only 3,000 of the first 5,000 of taxable income is NS, that leaves 2,000 starting rate band available for the savings income
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