AAT PTAX FA2016 Task 4

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dalmatian
dalmatian Registered Posts: 37 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
Could somebody explain this one:

Complete the table below to show the amount of investment income on which tax will be paid for 2016/17 for each taxpayer. Pick the correct rates of tax that would apply to that investment income by selecting it from the list.

1st Taxpayer: Anna
Investment income source: Building society interest
Investment income received: £4,780
Other taxable income: £138,100
Investment income on which tax will be paid: £ ???
Tax rate %: 40%

2nd Taxpayer: Brendan
Investment income source: Dividends
Investment income received: £7,210
Other taxable income: £88,520
Investment income on which tax will be paid: £????
Tax rate %: 32.5%

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  • dalmatian
    dalmatian Registered Posts: 37 New contributor 🐸
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    Can anyone help with this one? Many thanks
  • lannieloo
    lannieloo Registered Posts: 95
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    Anna, no personal allowance...
    Deduct the 500 savings allowance...
    142,350 taxable
    32000 x 20% = 6400
    110350 x 40% = 44,140
    Tax liability = 50540
    Is that right?
  • lannieloo
    lannieloo Registered Posts: 95
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    Brendan
    Non savings 88,000 -11000 pa = 77000
    32000 x 20% = 6400
    45000 x 40% = 18000

    Dividends 7210 - 5000 dividend allowance
    = 2210 x 32.5% = 718.25

    Total tax liability = 25118.25
    ??
  • vladlenka
    vladlenka Registered Posts: 4
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    Hi. I was doing this as well. But the answer is easier when we think. They ask only investment income taxable amount , not total tax liability.
    Thus for Anna taxable investment income will be 4780-500 (allowance as high rate tax payer)=4280£, @ 40%
    And for Brendan 7210-5000(allowance) =2210£ taxed at 32.5%

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