Hi,
Please clarify if my understanding is correct:
Nil rate band means -
Basic rate only pay tax on amounts above £1k?
High rate tax payers only pay on amounts above £500?
Also 0% starting rate is very confusing for me.
Taxable savings income falls in first £5k = before minus any qualifying interest and other trading loss relief?
Therefore if taxable savings income >£5k then 0% starting rate does not apply?
Thanks
Ask the Tutor ACCA TX-UK
Savings income - Tax confusion
May I firstly enquire whether you have you watched the OT lectures and worked through the OT notes on chapter 2?
Dear tutor,
Yes I have watched them, it is my only source of studies.
However I am getting confused by nil rate, 0% starting rate etc.
So do we first consider if they qualify for the nil rate band.
Then secondly see if 0% starting rate of tax will apply? For instance if £4000 in NSA income therefore £1000 remains. Do we apply 0% to only £1000 remaining from the £5k?
Sorry that you are still having problems with this area but the reason why I asked if you had read the OT course notes and listened to the lectures is because on p.7 of the notes, section 2.2 part (e) on savings income, the last paragraph states "If applicable the starting rate is applied first to taxable savings income followed by the savings income nil rate band ....." which is the point you are questioning and example 5 Polly on p.9 illustrates.
Can I ask you to check this out please to see if you now understand this issue.
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