help with personal tax question

ann09

can somebody explain me how do we get the answer ?
its task 1.9 from personal tax exam fa10

ted received 3000 gross back interent for 2010/11

employment net imcome of personal allowances tax payable on interest
Nil 365
1500 506
10000 600
35000 720

clegganator

It took me a while to get my head around how they are asking it.

Nil - There is £2420 (or there about) at the savings rate of 10% and the remainder of the interest at 20%

1500 - Again there is a little bit of low savers 10% band to use up and remainder at 20%

100000 - obviously all the personal allowance is used up so all at 20%

35000 - Bit of the interest will sneak into higher rate of tax so most at 20% but a bit at 40%

Luby

ann09 wrote: »

ted received 3000 gross back interent for 2010/11

employment net imcome of personal allowances tax payable on interest
Nil 365
1500 506
10000 600
35000 720

So the one at Nil is presuming his employment income is £6475 (using all of his personal allowance) therefore £2440 of savings will be at 10% = £244 and the other £560 os savings income will be at 20% = £112, added =£356 * you have a typo.

The second one presumes his income has gone over his tax free allowance by £1500 - so you'll have to do £2440 - £1500 to see how much of that starting band is left of the savings = £940, so £940 of the savings income is at 10% = 94 the other £2060 is at 20% = £412... £412 + 94 = £506

The 3rd one is simply there is no starting savings band rate and because his income is nowhere near going over the basic rate allowance of £37400 it is just £3000 x 20% = £600

The 4th one is saying his income is £35000 and because the basic rate allowance is only upto £37400 he only has £2400 left at the basic rate so £2400 of his savings income will be at 20% = £480 however the other £600 of his savings income will be at higher rate of 40% so 600 x 40% = £240.... 240 + 480 = £720


Hope that helps

ann09

Thanks alot clegganator and luby , you guys are star :thumbup1:

nonmugglesue

I hated this question and like clegganator it took me ages to understand it x

clegganator

Employment net of personal allowances? What a mouthful! That said, I can't think of another way to put it...