Business Tax - Marginal Relief Formula - HELP NEEDED

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JBOWDEN88
JBOWDEN88 Registered Posts: 5
in AAT Level 4 (Level 8 in Scotland)
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

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  • BlueJeans
    BlueJeans Registered Posts: 56
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    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

    Believe you can and you're halfway there...
  • JBOWDEN88
    JBOWDEN88 Registered Posts: 5
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    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
    j1994 Registered Posts: 106
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    Hi I would appreciate it if anyone can help me with task 7 and task 4b from the aat sample assessment BTAX 2013

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