Level 4 Personal tax AAT practice assessment 1 FA2021 Task 6iii

IN2
IN2 Registered Posts: 1 New contributor ?
edited January 26 in Personal Tax
Hi everyone,
Task 6iii of Personal tax (FA2021) – practice assessment 1
i cannot under stand how they got to £40 for Mr Xs liability
my working is that 2% of interest income from 50000 invested in building society = 1000, less 500 allowance due to being higher earner leaves 500 to be taxed at 40%, = 200, not 40, what am i missing!

Thankyou for the help!

Comments

  • Anzelari
    Anzelari Registered Posts: 11 New contributor ?
    Hi, as I understand, £20,000 should be invested into ISA, interest from ISA not taxable. Remaining £30,000 will give £600 of interest, less allowance £500, £100 * 40%= 40. This is my understanding.
  • LucyWisniewski
    LucyWisniewski Registered Posts: 2 New contributor ?
    edited February 21
    i think they are wanting £20,000 invested in an ISA and the remaining £30,000 invested in the building society,
    therefore £30,000 x 2% interest = £600
    £600 - £500 = £100 (savings income allowance for higher rate taxpayer)
    £100 x 40% = £40
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