# Need help with Chapter 6 - How are people calculating what should be taxable

Posts: 2AAT Student
Hi I am due to sit my PTax exam in the next few days but am still really struggling with how to calculate what income should be taxable...

For example say you have £114,000 non savings income, £7,000 savings income and £16,000 dividend income. How would you go about calculating it? I seem to be doing it incorrectly and just need some tips on how to work it out correctly for the exam.

Thanks!

• West Midlands Posts: 376Registered
Just by looking at the numbers; are you taking account of the fact that there is no personal allowance as the total income is over £122,000? Assuming FA 2016.

• Posts: 2AAT Student
In all of the answers it looks like in this question they don't take account of personal allowance at all? Even when income is less than 122k.

Maybe i am reading it wrong but in this question we haven't been told to account for it. Maybe that is where i am going wrong. Yes it's FA 16!
• West Midlands Posts: 376Registered
Total income between £100,000 - £122,000 has an adverse affect on the personal allowance.

As a broad example; for every £2 over £100,000 the tax payer will lose £1 in allowance.

Total income £112,000
Limit (£100,000)
Excess £12,000

Personal allowance £11,000
Less (£12,000 X 0.5) (£6,000)
New PA £5,000

Therefore;

Total income £112,000
Less PA (£5000)
Taxable income £107,000

Adjusted net income can bring down total income, for the purposes of calculating the PA.

For instance

Total income £112,000
Less Gross Gift Aid (£4,000)
ANI £108,000.

Total income £112,000
Less PA (W) (£7000)
Taxable income £105,000

(W) PA £11,000
Total income £112,000
Less Gross Gift Aid (£4,000)
ANI £108,000
Limit (£100,000)
Excess X 0.5 £8,000 (£4,000)
New PA £7,000
• Posts: 4AAT Student
Hello. From what I understand there is no Personal allowance as 1st we have to plus all income £137000, so is over £122000, so no PA. (if we had some Gift aid or PPS -we could bring the income down)
• Posts: 201Registered, Tutor
Quite a few tasks start by giving you the TAXABLE income of an individual rather than the total income. If you are given the taxable income then the personal allowance has already been deducted. You have to be careful when reading the question.