Error in Personal Tax practice assessment

Bamboogarden

I'm going through the practice papers and one of the answers gives adjusted age allowance at £9380.

Is the answer in the book wrong because I thought that age allowance can't go below £9440.

Richard2013

Whether you believe it or not, I've stumbled upon the same mistake. AAT Sample assessment 2 from BPP's book Task 1.12

CeeJaySix

Without seeing the question I'd say you have a combination of two factors as Shamil suggests.

The first is an increase on the normal annual allowance due to the taxpayer's age (although I'm only assuming this as you mention an age allowance).

Whether or not the age allowance is relevant, personal allowance is reduced by £1 for every £2 net income is >£100,000. Hence it reduces to zero by £118,880 (as that is £2 x £9,440).

Does that fit with the question in your textbook?

Richard2013

The elderly person's income was well below the 100,000 limit.
Exact data: born in '36, pension:28200, dividend: 460

CeeJaySix

Age related allowances do reduce at a far lower level of income down to the normal PA - £1 for every £2 over £26,100 for FY13. You're right to say you cannot drop below the standard PA unless you also have >£100k income...assuming you figures here are gross they've done the maths right, but ignored the lower cap.

Bamboogarden

Richard2013 said:

Whether you believe it or not, I've stumbled upon the same mistake. AAT Sample assessment 2 from BPP's book Task 1.12

Yep, that's the one I'm talking about.

At least I now know that it's an error in the book and will only reduce the £9440 limit if they earn above £100,000.

Thank you everyone!