Personal Tax FA 2012 Help

Andrej

Hi All,

I was wondering if any one can help with these two questions from my BPP Question Bank? I cant get my head around how they arrived to the answers.

1.9) Ted Received £3,000 gross from his building society in interest for 2012/13.

Calculate the income tax payable on this interest for 2012/13, assuming that Ted's employment income, net of personal allowances, is as shown.

Employment income net of personal allowances Tax payable on interest
£ £
Nil (assume all his personal allowance has been used)
1,500
10,000
31,970


Answers

Employment income net of personal allowances Tax payable on interest
£ £
Nil (assume all his personal allowance has been used) 329
1,500 479
10,000 600
31,970 720


2.6) Vernon sold 4,000 shares in R Ltd for £36,200 on 23 February 2013. He had acquired his holdings in R Ltd as follows:

Date Transaction No of shares £

14 April 1998 Purchase 6000 18,400

29 May 2003 Right issue 1 for 20 £4 each

10 March 2013 Purchase 500 3,400


Answer

Share Pool

Date No of shares Cost (£)

14/4/98 Acquisition 6000 18,400
29/5/03 Right 1 for 20 @ £4 300 1,200

---

---

6,300 19,600
23/2/13 Disposal (3,500) (10,889)

---

---

c/f 2,800 8,711

---

---

I can work out everything else apart from the disposal, how do you get 3,500 shares for the disposal?

Kind regards,

Andre

emuratty

On your second question this is because of the matching rules, the purchase of 500 shares on 10th March is the first part of your disposal, but it never hits the share pool because the disposal takes place before they were purchased. So in the share pool you only have to show the remaining 3500 shares.

Andrej

Thanks emuratty that makes sense. I thought it was that initially but I wasnt too sure.

Can anyone explain the first question to me?

Nps

My personal tax knowledge is very rusty so please take this with a pinch of salt....

I've looked up the new tax bands but the calculations are done from memory so there is a very good chance I am wrong (especially as they are different to BPP's!), but I get the answers as

321
471
600
1192

But I'm sure someone will be along to correct me shortly.......

Nps

Ah, I've just re-read your question and see that it is using the 12/13 tax bands (I used the 13/14 bands in the post above).

In the first bit, there is no other taxable income so the first £2,710 of the £3000 can be taxed at 10% (starting savings rate), the remaining £290 will be taxed at 20% as normal.

In the next bit, there is £1500 of other income to be taxed, so only £1210 of the £3000 can be taxed at 10%, the remaining £1790 will be taxed at 20%.

In the next bit, all of the £3000 falls into the normal 20% tax band.

In the final bit, there is already a taxable income of £31,970 which only leaves £2,400 of the 20% tax bracket left. The remaining £600 will be taxed at 40%.

Andrej

Thanks NPS1976 as always you explains things so well. I can see now where I was going wrong.

Kind regards

Andrej