ACCA paper F6 UK Basic Income Tax computation 1.2

ACCA F6 | Taxation UK

Basic Income Tax Computation 1.2

In last discussion we have discussed about proforma of income tax, this time we will know different tax rates in different level of income.

The following rates of income tax apply in the year 2009/10

Income level	Band	Other income	Savings income	Dividend income
First £37400	Basic	20%	20%	10%
Above £37400	Higher	40%	40%	32.5%

Special rates

The 10% starting rate only applies where savings income falls the first £2440 of taxable income. Therefore, a taxpayer with taxable savings income will be taxed according to the level of their ‘other income’ as follows:

Other income	Income level	Taxed at
None	First £2440 of taxable savings income Next £34960 Balance above £37400	10% 20% 40%
Bellow £2440	Taxable savings income falling in the first £2440 Next £34960 Balance above £37400	10% 20% 40%
Excess of £2440	The 10% rate is not applicable Taxable savings income falling in the first £37400 Balance above £37400	20% 40%

Gain an easy half mark!!!

If there is any exempt income item in question, must mention in your answer that it is exempt. E.g. “Interest on ISA- exempt”