chargeable capital gains - 18% and 28% please help

soniaclair

If someone had a gain of £21,500 after selling an asset and after the annual exempt amount had been taken and then they had a income of £14,220, how do I work out the chargeable gain at 18% and 28% please?
The answers on the AAT practice exam are
18% - 17,565
28% - 3935

I don't know how they got these answers. The higher rate is applicable over 31,785

fournaanjez

With the higher rate band starting at £31,785

At 18%:
31785-14220= 17565, with 14220 of the basic rate band already having been used by other income

At 28%:
21500-17565=3935, total gain less whats already been taxed

Hope this helps

Adele69

I thought basic taxpayer rate was upto £32000?

Struggling to get my head around this with one example, only using non-residential

fournaanjez

@Adele69 it is for 2016/17, I assume this question is for the 2015/16 tax year as this was the band then.

Adele69

Thanks. I'm doing AQ2013 and wasn't sure where this question was coming from.

This is one of two areas, along with POA that my understanding is very weak, and really need to label all the figures to keep track of what is actually being calculated. Corporation Tax is so much easier

fournaanjez

@Adele69 more than happy to try to help with any questions you do have

soniaclair

Thank you
Yes its from the 2015 practice exam. just going through all of them because I have failed this business tax exam twice now.

soniaclair

can you help again sorry - because on the last person there gain was also £21,500 and income of £57,900 but on the answer for 18% its zero (0) and the 28% is £21,500.

Is this because they earn over the threshold?

fournaanjez

All of their basic rate band has been used up by their other income, so all of the taxable gain is taxed at the higher rate (28%)