Business Tax - Marginal Relief Formula - HELP NEEDED

JBOWDEN88

Hi guys,

I have my business tax exam on Thursday and while working through the practice test on Q4 regarding Marginal Relief formula i'm getting an answer that's very different from that of the answer paper.

The information on the question is:


A company has the following info year ended 31 Dec 15:

TTP: £480,000
Dividends Received (Net): £10,800


I then need to complete the marginal relief formula which I know is:

1/400 x Upper Limit - Augmented Profits x Normal TTP / Augmented Profits = Marginal Relief

My answer was:

1/400 x (£1,500,000 - £492,000) x (£480,000 / £492,000) = £2,459
£2,520 x £0.98



The answer paper has the correct answer as:

1/400 x £375,000 - £123,000 x £120,000 / £123,000 = £615



I've been looking at it for over an hour so maybe i've just confused myself but I can't work it out.
Any help would be greatly appreciated!

Jack

BlueJeans

Hi there.
U have to apportion upper limit and augmented profits too...

So 1500000*3/12=375000
480000*3/12=120000

480000+12000=492000*3/12=123000

JBOWDEN88

BlueJeans said:

Hi there.

U have to apportion upper limit and augmented profits too...



So 1500000*3/12=375000

480000*3/12=120000



480000+12000=492000*3/12=123000

Thank you. I get it now. I haven't seen the x3/12 anywhere when i've been studying the unit but that makes it a lot more straight forward once I remember I need to apply that to everything.

Really appreciate it

j1994

Hi I would appreciate it if anyone can help me with task 7 and task 4b from the aat sample assessment BTAX 2013