Registered Posts: 12 Regular contributor ⭐
Hi

I really dont get this answer:

Question: Someone has Capital Gains, £24,800 & Net Income, £32,000.
Caluculate tax payable on their capital gains.

Gains £24,800 (I get this)
Annual exemption £10,100 (I get this)
Taxable Gain £14,700 (I get this)

Tax @ 18% £972 Tax @ 28% £2,604 (I dont get this). I thought an individual only pays cap.gains @ 18% on taxable gains only, i.e. £14,700 @ 18% = £2,646.

Can anyone help?
Thanks. Neil.

• Registered Posts: 9 Regular contributor ⭐
Hi Neil,

I have just sat Business tax for year 2011/12.
How I see it is because the CGT takes them into a higher tax band

Assumptions = personal allowance 2010/11 = £6475, higher tax band £37400, CGT 10100.
Total earnings for year £32000 + 24800 = £56800 total

total earnings £56800 minus CGT £10100 = 46700
earnings (£32000) minus higher tax band (£37400) = 5400 @ 18% = £972
£46700 (total earning minus CGT allowance) - 37400 = 9300 @ 28% = £2604

• Registered Posts: 238 Beyond epic contributor 🧙‍♂️
without doing the math, I belive it has something to do with the £32,000 incomme.
they will be taxed on two tax brakets. this is linking your knowledge to PTax

hope this helps
• Registered Posts: 896 Epic contributor 🐘
If he is a basic rate tax payer, then CGT is payable at 18% on an amount of taxable gains up to the amount of the taxpayer's unused basic rate band and then 28% on the rest.

I just got back from taking this exam.

B x
• Registered Posts: 896 Epic contributor 🐘
Aw, Diddy Mau beat me to it!

B x
• Registered Posts: 646 Epic contributor 🐘
neilw41 wrote: »
Hi

I really dont get this answer:

Question: Someone has Capital Gains, £24,800 & Net Income, £32,000.
Caluculate tax payable on their capital gains.

Gains £24,800 (I get this)
Annual exemption £10,100 (I get this)
Taxable Gain £14,700 (I get this)

Tax @ 18% £972 Tax @ 28% £2,604 (I dont get this). I thought an individual only pays cap.gains @ 18% on taxable gains only, i.e. £14,700 @ 18% = £2,646.

Can anyone help?
Thanks. Neil.

Having worked it out - you are using the 2010/11 tax rates.

Higher-rate limit is £37,400

CGT is taxed as 'top slice' income, therefore:

Salary = 32,000
HRL = 37,400
CGT bal = 5,400* @ 18% = £972

CGT taxable gain = 14,700
Less * = 9,300 @ 28% = £2,604

Hope this helps.

Regards

Dean
• Registered Posts: 238 Beyond epic contributor 🧙‍♂️
BeccaLouJ9 wrote: »
Aw, Diddy Mau beat me to it!

B x
ha ha, only just

How was the exam???
• Registered Posts: 12 Regular contributor ⭐
Thanks guys, very helpful. I just with the question was clearer. Have a great weekend. Neil.
• Registered Posts: 896 Epic contributor 🐘
Diddy Mau wrote: »
ha ha, only just

How was the exam???

It was good, I really like this unit.

I think that there could be more questions to be honest. I finish the exams all in about an hour or so. This time was a bit less. Maybe I'll eat my words if I get a fail in six weeks time!!

There were Q's on nearly everything I think.. I can't think of anything that wasn't in it!

B x