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Basic income tax computation
04-14-2010, 04:30 PM
Post: #1
Basic income tax computation
Salam,
Is there any one who can help me.. in this simple income tax computation.. Plz help me waiting at uni for ur reply

Q. Billy earned trading income of 25,000 and recieved bank deposit interest of 8000 pounds in 2009/2010

Billy income tax computation 2009/2010
non.Svng SVNG INcome
Pounds Pounds
Trading Income 25,000
Bank Deposit Interest 8000*100/80 10,000
------------------ -----------
Total income 25,000 10,000
Less Personal Allowances <6475>
------------------ -----------
18,525 10,000

TAX CALCULATION
Non Savings
18525@ 20 % = 3705

Savings
10,000 @ 20 % 2000
SEE note 1 ------------
Tax Liability 5705
Less tax deducted at source
Bank deposit Interest 10,000 @ 20% <2000>
-------------
Tax Payable 3,705




Q. Recalculate Billy's income tax payable assuming the bank deposit interest is 16000 pounds..

Billy Income Tax computation 2009/2010

non.svng SVNGs Income
Pounds Pounds
Trading Income 25,000
Bank Deposit Interest 16000*100/80 20,000
------------------ -----------
Total income 25,000 20,000
Less Personal Allowances <6475>
------------------ -----------
18,525 20,000
Tax Calcultaion
Non Savings
18525 @ 20% = 3705

Savings
18875@20% = 3775
1125@40 % = 450
---------- ----------
20,000 Tax Liability 7930
<b>SEE note 1</b>
Less Tax Deducted at source
Bank deposit interest 20,000 @ 20% <4000>
-----------
Tax payable 3930


NOTE 1 YAr.. i cant understand... first of all how and why he split in question (2) 20,000 into 1125+18875=20,000 and why 40% high rate is applied
As in question 1 he just simply applied tax rate of 20 % on 10,000.
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04-14-2010, 04:33 PM
Post: #2
 
OOOOPPPPS..Format is messed up.. dnt knw why..sorry.
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