Example 3
Anwar and Barry each have total income of £50000 none of which is savings or dividend income. They made the following payments during 2009/10.
· Anwar made interest payments during the year totaling £2000 on a loan on his mortgage for his principal private residence.
· Barry made interest payments of £2000 on a loan to invest on a partnership in which he is a partner.
Calculate the income tax liability for Anwar and Barry for 2009/10.
Solution
Income tax computation 2009/10
| Anwar | Barry |
| £ | £ |
Total income Less Reliefs: Qualifying interest paid Net income Less: personal allowance Taxable income | 50000 50000 (6475) 43525 | 50000 (2000) 48000 (6475) 41525 |
Income tax | £ | £ | | | |
Basic rate Higher rate Income tax liability | 37400 6125 43525 | 37400 4125 41525 | × 20% × 40% | 7480 2450 9930 | 7480 1650 9130 |
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