Ptc - need help

Maria24

Hi-

HELP not sure what to do , I am revising now for my PTC unit 19 which is tomorrow and
I am really confused because I know the goverment introduced back the 10% starting rate band for employment income 2008/09 of 2320 . I bought the
PTC book from Kaplan to revise and all the exercises have not got the starting rate of 10% for employment income.
Also, I attended a AAT course revision on 31st of May and I have noticed now that the working given to my by the teacher does not have the starting rate band for employment income.
2320 at 10%
2321 - 34800= 20%
24801 - over at 40%

MANY THANJS

Kyle

The government didn't bring back the 10% starting rate. They increased personal allowance from 5435 to 6035 to compensate.

With employment income, the bands are (for 08/09):

0 - 34800 @ 20%
34800+ @ 40%

If the individual doesn't earn more than 2320 (after personal allowance), however, they can claim a 10% starting rate on their savings income up to 2320.

So if they'd earned £7035 in employment, and £1500 in gross taxable interest it would be calculated as:

Employment Income = £7035
Less Personal Allowance = 6035
Taxable Employment Income = £1000
Tax on Employment Income (20%) = £200

Savings Income = £1500
Taxable Interest at 10% (£2320-£1000=£1320) = £132
Taxable Interest at 20% (£1500-£1320=£180) = £36

Total Tax Liability: £368

kylestevens

hi, the government increased personal allowance to 6035 during the year to make up for the 10% band disappearing, the 2320 has not been re introduced. However, the first 2320 of savings income only is charged at 10% if there is no non-savings income. If there is non-savings income over 2320 then savings income will be taxed at basic & higher rate, whichever applies. If for example, 2000 total non-savings income is received, it will be taxed at 20% but the first 320 of savings income with taxed at 10%.

Hope this helps!?

sarah_d

employment income at 20% you go straight to 20% for savings income, i thought the 10% rate for savings income was only if there was no employment or 'other income' and so savings and dividends is the only form of income, then would you tax the first £2320 of savings income at the 10% rate.....

This rings true also due to the fact that savings are received net of 20%
Ok, just re read kylestevens post, you are thinking the same as me, but you explained it better!

Kyle

No, it's rare, but you still get the 10%.