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

JessT31JessT31 AAT Student Posts: 2
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!

Comments

  • BertieBertie West Midlands Registered Posts: 234
    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.

  • JessT31JessT31 AAT Student Posts: 2
    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!
  • BertieBertie West Midlands Registered Posts: 234
    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
    burg
  • vladlenkavladlenka AAT Student Posts: 4
    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)
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