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New tax rate from 2010-2011

New tax rate from 2010-2011

Didn't find your answer?

I just wondered if someone could check this one for me. I calculated tax due is £63.770 but the answer is £60,770. So I am not sure what I am missing?

This is for tax year 06/04/2010 to 05/04/2011.
Assumptions
Personal allowance £6,475
Basic Rate Tax Band £37,400

Mr x has following income for the tax year.
Employment income £160,000
Bank Interest £8000 (net – 20% tax deducted at source)
Dividends £9000 (net or 10% tax credit)

I calculated as follows
Employment Income £160,000
Interest £10,000
Dividend £10,000
Total Income £180,000

So no PA and 42.5% & 50% tax apply.

£37400 @ 20% = £7,480
£112,600 @ 40% =£45,040
£10,000 (£160,000-37,400-112600) @ 50% =£5,000
£10,000 @ 50% £5,000
£10,000 @ 42.5% £4,250

Total tax £66,770
Less deducted at sourse £3,000

Tax liability/due £63,770.

Thanks in advance for the help.

Neil M

Replies (6)

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By Anonymous
17th Jun 2009 09:51

Thanks JCRich & Penny Chambers
Thanks JCRich and Penny Chambers for confirming the answer.

This question is part of a CPD article. Unless I answered £60,770 I do not get cpd points credit!

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By Anonymous
16th Jun 2009 16:55

The fault is in the answer
I think that this is merely a case of the answer that was supplied to you, being wrong. If you lose the PA's and run it on 09/10 rates, you get £60,770. The answer that you have been given appears to have been calculated on 09/10 rates, not the 10/11 ones.

Your £63770 is correct, the difference is £1k of divi higher rate tax on a gross £10k(42.5%-32.5%), another £1k on £10k interest etc (50%-40%) and a simlar £1k on earned income as per the interest, i.e. the differences between 09/10 and 10/11 rates.

Hope this helps.

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By Anonymous
15th Jun 2009 21:02

I did not come to £60,770
I did not come to the answer of £60,770. The answer was given part of the question. I checked over and over and my answer came to £63,770. I thought if I missed any requirement of new tax rates and personal allowances, hence I posted this question for someone to check, whether £63,770 is the correct answer. You kindly took time and confirm that the answer should be £63,770.0 not £60770.

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By Paula Sparrow
15th Jun 2009 17:40

But I don't understand how you got to £60,770 -
if your calculation and my calculation comes to £63,770?

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By Anonymous
15th Jun 2009 14:36

60770
Thanks Paula for your answer.

The amount of £60,770 given with the quesition on new tax rates and abatement of personal allowance for higher earner from 2010-2011.

Thanks again

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By Paula Sparrow
15th Jun 2009 14:20

I agree £63,770
so where do you get £60,770 from?

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