Personal Tax FA2015 - Task 6(b) written
yan18
Registered Posts: 19 Regular contributor ⭐
Yubin, 36 has following income for 2015/16:
Employment £41,300
Interest received £1,480
Dividends received £774
Yubin is considering contributing into a private pension scheme, paying 5% of his employment income each year, he does not understand the taxation implications of doing this.
Explain how he will get tax relief on such contributions and tax implications if he has paid into this scheme in 2015/16.
The answer reads:
5% of employment income = £2,065
Amount will be grossed up to extend basic rate = £31,785 + £2,581 = £34,366.
All income for 2015/16 would be taxable in the basic rate. - can someone explain why this is? His total income would be £41,300 + £1,480 + £774 = £43,554 which would exceed the extended basic rate of £34,366 ??
Employment £41,300
Interest received £1,480
Dividends received £774
Yubin is considering contributing into a private pension scheme, paying 5% of his employment income each year, he does not understand the taxation implications of doing this.
Explain how he will get tax relief on such contributions and tax implications if he has paid into this scheme in 2015/16.
The answer reads:
5% of employment income = £2,065
Amount will be grossed up to extend basic rate = £31,785 + £2,581 = £34,366.
All income for 2015/16 would be taxable in the basic rate. - can someone explain why this is? His total income would be £41,300 + £1,480 + £774 = £43,554 which would exceed the extended basic rate of £34,366 ??
0
Comments
-
SORRY
I've realised that this relates to the first part of the question which would calculate the tax liability to be £33,410 and therefor this would all be taxable in the basic rate (!)
Please delete this thread.. I'm not sure how to...!!0 -
Have you included the tax free allowance?0
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