PTAX FA2016 exam Question 6

jodyewhite

Hi
I am looking at the practice exam for calculating income tax, dos anyone know why they have not taken off the PA in the answer?

Many thanks

Bertie

What's the question? Is income above £122,000 by any chance?

jodyewhite

Hi bertie
The employment income is £105,500 and self employment profits are £66,000.

Bertie

Ok.

Total income over £100,000 starts to affect the personal allowance.

For every £1 over £100k you'll lose 50p of the allowance. Once you hit £122k there is no allowance.

Gross Gift Aid and Personal pension contributions can lower the total income for adjusted net income purposes. Thus possibly bringing client under £122,000.

jodyewhite

Hi Bertie
Many Thanks I forgot about £122k wiping out the allowance, remember the other bit.

Thanks again

Bertie

Just remember for every X over £100k you'll lose half the PA for it - PA is lost at £122k unless you can adjust net income.

Next year the limit will be slightly higher.
As you can see the 22k is double the current PA.