Let’s do the questions from Tutorial 12

Annual Taxable Income Bracket (£)

Tax Rate

Total Tax paid (£) at the top of this taxable income bracket

0 – 12,000

10%

1,200

12,000 – 31,500

15%

4,125

31,500 – 54,950

20%

8,815

54,950 – 81,450

29%

16,500

81,450 – 184,000

37%

55,469

184,000 and over

45%

 

The table shows the total tax paid (£) on annual taxable income.

For example, a person with an annual taxable income of £45,000 will pay £4,125 plus 20% of (£45,000 – £31,500).

// @todo
1. Ruoxuan has an annual taxable income of £23,330. The income tax, to the nearest £, he has to pay is:
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    Explanation

    The correct answer is C.

    £23,300 fits into the second tax bracket… £12,000 gets taxed at 10%, yielding £1,200 (as shown in the RH column)

    The remaining (£23,330 – £12,000) = £11,330 gets taxed at 15%, yielding £1,699.50 – adding this to £1,200 makes £2,900 (4sf)

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 12,000

    10%

    1,200

    12,000 – 31,500

    15%

    4,125

    31,500 – 54,950

    20%

    8,815

    54,950 – 81,450

    29%

    16,500

    81,450 – 184,000

    37%

    55,469

    184,000 and over

    45%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £45,000 will pay £4,125 plus 20% of (£45,000 – £31,500).

    // @todo
    2. Olenka has an annual taxable income of £114,050. The income tax she has to pay is:
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    Explanation

    The correct answer is B.

    £114,050 fits into the fifth tax bracket:

    The RH column shows that the first £81,450 yields £16,500 tax;

    Then, the remaining (£114,050 – £81,450) = £32,600 gets taxed at 37%, yielding £12,062 and thus a total of £28,562

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 12,000

    10%

    1,200

    12,000 – 31,500

    15%

    4,125

    31,500 – 54,950

    20%

    8,815

    54,950 – 81,450

    29%

    16,500

    81,450 – 184,000

    37%

    55,469

    184,000 and over

    45%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £45,000 will pay £4,125 plus 20% of (£45,000 – £31,500).

    // @todo
    3. Max pays £10,000 tax per year. What is his taxable income, to the nearest £10, before tax is deducted?
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    Explanation

    The correct answer is D.

    If Max pays £10,000 tax per year, his income must lie in the fourth tax bracket (i.e. he earns £54,950 to £81,450).

    £10,000 – £8,815 = £1,185, which must have come from £1,185/0.29 = £4,086.21 (2dp). Adding this to £54,950 gives £59,040 (5sf)

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 12,000

    10%

    1,200

    12,000 – 31,500

    15%

    4,125

    31,500 – 54,950

    20%

    8,815

    54,950 – 81,450

    29%

    16,500

    81,450 – 184,000

    37%

    55,469

    184,000 and over

    45%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £45,000 will pay £4,125 plus 20% of (£45,000 – £31,500).

    // @todo
    4. Marie-Jo has an annual taxable income equivalent to £4,000 per month. If she wants to save enough money each month to cover her tax for the year, how much must she save as a rough percentage of her monthly income?
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    Explanation

    The correct answer is D.

    £4,000 per month = £48,000 per year, i.e. 3rd tax bracket

    Tax for the year = £4,125 + [ 20% x (£48,000 – £31,500) ]  = £4,125 + 20% x 16,500 = £4,125 + 3,300 = £7,425

    Percentage of income = (£7,425 / £48,000) x 100 = 15.5% (3sf)

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 8,950

    10%

    895

    8,950 – 36,250

    15%

    4,990

    36,250 – 87,850

    25%

    17,890

    87,850 – 183,250

    28%

    44,602

    183,250 – 400,000

    33%

    116,129

    400,000 and over

    39.6%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £30,000 will pay £895 plus 15% of (£30,000 – £8,950).

    // @todo
    5. Lucia pays £1,900 per month in income tax. To the nearest £10, what is her annual salary, after tax is deducted?
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    Explanation

    The correct answer is A.

    Annual tax paid within 4th bracket = (£1,900 x 12) – £17,890 = £4,910

    Income within 4th bracket = £4,910 / 0.28 = £17,535.71 (2dp)

    Post-tax Salary = (£87,850 + £17,535.71) – £22,800 = £82,585.71 (2dp) = £82,590 to the nearest £10

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 8,950

    10%

    895

    8,950 – 36,250

    15%

    4,990

    36,250 – 87,850

    25%

    17,890

    87,850 – 183,250

    28%

    44,602

    183,250 – 400,000

    33%

    116,129

    400,000 and over

    39.6%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £30,000 will pay £895 plus 15% of (£30,000 – £8,950).

    // @todo
    6. Ezra pays £1,450 per month in income tax. What is his annual taxable income?
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    Explanation

    The correct answer is E.

    Annual tax = £1,450 x 12 = £17,400, i.e. in 3rd tax bracket

    Tax paid within 3rd bracket = £17,400 – £4,990 = £12,410

    Income within 3rd bracket = £12,410 / 0.25 = £49,640

    Total income = £36,250 + £49,640 = £85,890

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 8,950

    10%

    895

    8,950 – 36,250

    15%

    4,990

    36,250 – 87,850

    25%

    17,890

    87,850 – 183,250

    28%

    44,602

    183,250 – 400,000

    33%

    116,129

    400,000 and over

    39.6%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £30,000 will pay £895 plus 15% of (£30,000 – £8,950).

    // @todo
    7. Delilah is promoted at work, and her salary rises from £80,000 to £90,000 pre-tax. By how much does the amount of tax she pays change?
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    Explanation

    The correct answer is C.

    Old tax = £4,990 + [ 25% x (£80,000 – £36,250) ] = £15,927.50

    New tax = £17,890 + [ 28% x (£90,000 – £87,850) ] = £18492

    Increase = £18492 – £15927.50 = £2564.50

    Post Comment

    Annual Taxable Income Bracket (£)

    Tax Rate

    Total Tax paid (£) at the top of this taxable income bracket

    0 – 8,950

    10%

    895

    8,950 – 36,250

    15%

    4,990

    36,250 – 87,850

    25%

    17,890

    87,850 – 183,250

    28%

    44,602

    183,250 – 400,000

    33%

    116,129

    400,000 and over

    39.6%

     

    The table shows the total tax paid (£) on annual taxable income.

    For example, a person with an annual taxable income of £30,000 will pay £895 plus 15% of (£30,000 – £8,950).

    // @todo
    8. Last year, Helga paid £9,166 per month in income tax. After tax deductions, how much did she earn in the year, to the nearest £?
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    Explanation

    The correct answer is E.

    Annual Tax within 5th bracket = (£9,166 x 12) – £44,602 = £65,390

    Income within 5th bracket = £65,390 / 0.33 = £198,151.52

    Post-tax income = (£183,250 + £198,151.52) – (£9,166 x 12) = £271,409.52 (2dp) = £271,410 to the nearest £

    Post Comment

    Annual Taxable Income Bracket ($)

    Tax Rate

    Total Tax paid ($) at the top of this taxable income bracket

    0 – 12,000

    12%

    1,440

    12,000 – 44,120

    16%

    6,579.20

    44,120 – 71,450

    22%

    12,591.80

    71,450 – 151,000

    35%

    40,434.30

    151,000 and over

    50%

     

    The table shows the total tax paid ($) on annual taxable income.

    For example, a person with an annual taxable income of $30,000 will pay $1,440 plus 16% of ($30,000 – $12,000).

    // @todo
    9. Leanne earns $63,000 a year. How much income tax does she pay?
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    Explanation

    The correct answer is C.

    Total Tax = $6,579.20 + [ 22% x ($63,000 – $44,120) ]

    = $6,579.20 + (22% x $1,880) = $6,579.20 + $4,154 

    = $10,732.80

    Post Comment

    Annual Taxable Income Bracket ($)

    Tax Rate

    Total Tax paid ($) at the top of this taxable income bracket

    0 – 12,000

    12%

    1,440

    12,000 – 44,120

    16%

    6,579.20

    44,120 – 71,450

    22%

    12,591.80

    71,450 – 151,000

    35%

    40,434.30

    151,000 and over

    50%

     

    The table shows the total tax paid ($) on annual taxable income.

    For example, a person with an annual taxable income of $30,000 will pay $1,440 plus 16% of ($30,000 – $12,000).

    // @todo
    10. Symala earns $23,158 a year. How much income tax does she pay?
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    Explanation

    The correct answer is B.

    Total Tax = $1,440 + [ 16% x ($23,158 – $12,000) ]

    = $1,440 + (16% x $11,158) = $1,440 + $1,785.28 

    = $3,225.28

    Post Comment

    Annual Taxable Income Bracket ($)

    Tax Rate

    Total Tax paid ($) at the top of this taxable income bracket

    0 – 12,000

    12%

    1,440

    12,000 – 44,120

    16%

    6,579.20

    44,120 – 71,450

    22%

    12,591.80

    71,450 – 151,000

    35%

    40,434.30

    151,000 and over

    50%

     

    The table shows the total tax paid ($) on annual taxable income.

    For example, a person with an annual taxable income of $30,000 will pay $1,440 plus 16% of ($30,000 – $12,000).

    // @todo
    11. Nathan’s annual taxable income is $50,000. What, to the nearest %, is the average rate of income tax he pays over the entirety of his salary?
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    Explanation

    The correct answer is C.

    Annual Tax = $6,579.20 + [ 22% x ($50,000 – $44,120) ] 

    = $6,579.20 + (22% x $5,880) = $6,579.20 + $1,293.60 = $7,872.80

    Average tax rate = 7,872.80 / 50,000 x 100 = 16% (2sf)

    Post Comment

    Annual Taxable Income Bracket ($)

    Tax Rate

    Total Tax paid ($) at the top of this taxable income bracket

    0 – 12,000

    12%

    1,440

    12,000 – 44,120

    16%

    6,579.20

    44,120 – 71,450

    22%

    12,591.80

    71,450 – 151,000

    35%

    40,434.30

    151,000 and over

    50%

     

    The table shows the total tax paid ($) on annual taxable income.

    For example, a person with an annual taxable income of $30,000 will pay $1,440 plus 16% of ($30,000 – $12,000).

    // @todo
    12. One year, the lower and upper bounds of each income tax bracket increase by 10%. As a result, how does the amount of tax Mel pays annually on her salary of $38,000 change?
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    Explanation

    The correct answer is D.

    The lowest upper bound becomes $13,200, and the tax paid at the top of the bottom bracket becomes 12% x 13,200 = $1,584

    Old tax = $1,440 + [ 16% x ($38,000 – $12,000) ] = $5,600

    New tax = $1,584 + [ 16% x ($38,000 – $13,200) ] = $5,552 ($48 lower)

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances

    2016-17 (£)

    2017-18 (£)

    Personal allowance for people aged under 60

    7,050

    7,275

    Personal allowance for people aged 60-74

    9,220

    9,400

    Personal allowance for people aged 75 and over

    9,850

    9,950

     

    Current UK income tax bands

    Income tax bands

    2016-17 Rate

    2017-18 Rate

    2016-17 (£)

    2017-18 (£)

    Starting Rate

    12%

    12%

    0 – 2,650

    0 – 2,850

    Basic Rate

    24%

    24%

    2,650 – 35,000

    2,850 – 36,000

    Higher Rate

    44%

    44%

    Over 35,000

    Over 36,000

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

    • have a tax-free allowance of £7,050
    • pay tax at 12% on £2,650
    • and pay tax at 24% on the remaining £10,300
    // @todo
    13. How much would a 30-year-old with an annual salary of £41,000 pay in income tax during the tax year 2016-17?
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    Explanation

    The correct answer is E.

    Personal allowance, under 60, 2016-17 = £7,050

    Tax in Starting band = 12% x £2650 = £318

    Tax in Basic band = 24% x ((£41,000 – £7,050 – £2,650) = £7,512

    Total Tax = £318 + £7,512 = £7,830

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances 2016-17 (£) 2017-18 (£)
    Personal allowance for people aged under 60 7,050 7,275
    Personal allowance for people aged 60-74 9,220 9,400
    Personal allowance for people aged 75 and over 9,850 9,950

     

    Current UK income tax bands
    Income tax bands 2016-17 Rate 2017-18 Rate 2016-17 (£) 2017-18 (£)
    Starting Rate 12% 12% 0 – 2,650 0 – 2,850
    Basic Rate 24% 24% 2,650 – 35,000 2,850 – 36,000
    Higher Rate 44% 44% Over 35,000 Over 36,000

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

    • have a tax-free allowance of £7,050
    • pay tax at 12% on £2,650
    • and pay tax at 24% on the remaining £10,300
    // @todo
    14. What would the monthly tax deduction be from the salary of a 62-year-old earning £17,500 during the 2017-18 tax year?
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    Explanation

    The correct answer is B.

    Personal allowance, 60-74, 2017-18 = £9,400

    Tax in Starting band = 12% x £2,850 = £342

    Tax in Basic band = 24% x (£17,500 – £9,400 – £2,850) = £1,260

    Monthly Tax = (£342 + £1,260) / 12 = £133.50

    Post Comment
    Rayyan Malik Medicmind Tutor

    Wed, 17 Feb 2021 13:28:34

    The issue with a question, answer option repeated twice and right answer not listed. 133.50

    UK income tax allowances, rates and bands

    Income tax allowances

    2016-17 (£)

    2017-18 (£)

    Personal allowance for people aged under 60

    7,050

    7,275

    Personal allowance for people aged 60-74

    9,220

    9,400

    Personal allowance for people aged 75 and over

    9,850

    9,950

     

    Current UK income tax bands

    Income tax bands

    2016-17 Rate

    2017-18 Rate

    2016-17 (£)

    2017-18 (£)

    Starting Rate

    12%

    12%

    0 – 2,650

    0 – 2,850

    Basic Rate

    24%

    24%

    2,650 – 35,000

    2,850 – 36,000

    Higher Rate

    44%

    44%

    Over 35,000

    Over 36,000

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

    • have a tax-free allowance of £7,050
    • pay tax at 12% on £2,650
    • and pay tax at 24% on the remaining £10,300
    // @todo
    15. How much would a 52-year-old with an annual salary of £43,000 pay in income tax during the tax year 2017-18?
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    Explanation

    The correct answer is C.

    Personal allowance, under 60, 2017-18 = £7,275

    Tax in Starting band = 12% x £2,850 = £342

    Tax in Basic band = 24% x (£43,000 – £7,275 – £2,850) = £7,890

    Total Tax = £342 + £7,890 = £8,232

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances

    2016-17 (£)

    2017-18 (£)

    Personal allowance for people aged under 60

    7,050

    7,275

    Personal allowance for people aged 60-74

    9,220

    9,400

    Personal allowance for people aged 75 and over

    9,850

    9,950

     

    Current UK income tax bands

    Income tax bands

    2016-17 Rate

    2017-18 Rate

    2016-17 (£)

    2017-18 (£)

    Starting Rate

    12%

    12%

    0 – 2,650

    0 – 2,850

    Basic Rate

    24%

    24%

    2,650 – 35,000

    2,850 – 36,000

    Higher Rate

    44%

    44%

    Over 35,000

    Over 36,000

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2016-17, someone aged 45 earning £20,000 per year, will:

    • have a tax-free allowance of £7,050
    • pay tax at 12% on £2,650
    • and pay tax at 24% on the remaining £10,300
    // @todo
    16. How much would a 76-year-old with an annual salary of £47,200 pay in income tax during the tax year 2016-17?
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    Explanation

    The correct answer is D.

    Personal allowance = £9,850, Tax in S band = 12% x £2,650 = £318

    Tax in Basic band = 24% x (£35,000 – £2,650) = £7,764

    Tax in Higher band = 44% x (£47,200 – £35,000 – £9,850) = £1,034

    Total Tax = £318 + £7,764 + £1,034 = £9,116

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances

    2012-13 (£)

    2013-14 (£)

    Personal allowance for people aged under 55

    5,235

    5,485

    Personal allowance for people aged 55-69

    6,115

    6,290

    Personal allowance for people aged 70 and over

    6,720

    6,960

     

    Current UK income tax bands

    Income tax bands

    2012-13 Rate

    2013-14 Rate

    2012-13 (£)

    2013-14 (£)

    Starting Rate

    11%

    11%

    0 – 4,100

    0 – 4,240

    Basic Rate

    18%

    18%

    4,100 – 28,500

    4,240 – 29,990

    Higher Rate

    45%

    45%

    Over 28,500

    Over 29,990

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

    • have a tax-free allowance of £6,290
    • pay tax at 11% on £4,240
    • and pay tax at 18% on the remaining £9,470
    // @todo
    17. Two colleagues at a supermarket both earn £21,000 per year. Given that one is 44 and the other is 66, what is the difference in their income tax contributions in 2012-13?
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    Explanation

    The correct answer is A.

    44-year-old: 11% x £4,100 + 18% x (£21,000 – £4,100 – £5,235)

    = £2,550.70

    66-year-old: 11% x £4,100 + 18% x (£21,000 – £4,100 – £6,115)

    = £2392.30, which is £158.40 lower

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances

    2012-13 (£)

    2013-14 (£)

    Personal allowance for people aged under 55

    5,235

    5,485

    Personal allowance for people aged 55-69

    6,115

    6,290

    Personal allowance for people aged 70 and over

    6,720

    6,960

     

    Current UK income tax bands

    Income tax bands

    2012-13 Rate

    2013-14 Rate

    2012-13 (£)

    2013-14 (£)

    Starting Rate

    11%

    11%

    0 – 4,100

    0 – 4,240

    Basic Rate

    18%

    18%

    4,100 – 28,500

    4,240 – 29,990

    Higher Rate

    45%

    45%

    Over 28,500

    Over 29,990

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

    • have a tax-free allowance of £6,290
    • pay tax at 11% on £4,240
    • and pay tax at 18% on the remaining £9,470
    // @todo
    18. To the nearest £0.01, what is the average monthly income tax contribution of a 21-year-old who earns £5,309 during the 2012-13 tax year?
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    Explanation

    The correct answer is A.

    Taxable income = £5,309 – £5,235 = £74 per year

    Tax at Starting rate = 11% x £74 = £8.14 per year

    Monthly Tax = £8.14 / 12 = £0.678 (3sf) per month

    i.e. £0.68 to the nearest £0.01

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances

    2012-13 (£)

    2013-14 (£)

    Personal allowance for people aged under 55

    5,235

    5,485

    Personal allowance for people aged 55-69

    6,115

    6,290

    Personal allowance for people aged 70 and over

    6,720

    6,960

     

    Current UK income tax bands

    Income tax bands

    2012-13 Rate

    2013-14 Rate

    2012-13 (£)

    2013-14 (£)

    Starting Rate

    11%

    11%

    0 – 4,100

    0 – 4,240

    Basic Rate

    18%

    18%

    4,100 – 28,500

    4,240 – 29,990

    Higher Rate

    45%

    45%

    Over 28,500

    Over 29,990

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

    • have a tax-free allowance of £6,290
    • pay tax at 11% on £4,240
    • and pay tax at 18% on the remaining £9,470
    // @todo
    19. During the 2013-14 tax year, Martin, who is 61-years-old, receives a taxable £2,500 bonus. How much more does he pay in income tax compared to what would have been deducted from his £25,000 salary alone?
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    Explanation

    The correct answer is C.

    Personal allowance and Tax at Starting rate remain unchanged

    Old Tax at Basic = 18% x (£27,500 – £4,240 – £6,290) = £3,054.60

    New Tax at Basic = 18% x (£25,000 – £4,240 – £6,290) = £2,604.60

    Difference = £450

    Post Comment

    UK income tax allowances, rates and bands

    Income tax allowances

    2012-13 (£)

    2013-14 (£)

    Personal allowance for people aged under 55

    5,235

    5,485

    Personal allowance for people aged 55-69

    6,115

    6,290

    Personal allowance for people aged 70 and over

    6,720

    6,960

     

    Current UK income tax bands

    Income tax bands

    2012-13 Rate

    2013-14 Rate

    2012-13 (£)

    2013-14 (£)

    Starting Rate

    11%

    11%

    0 – 4,100

    0 – 4,240

    Basic Rate

    18%

    18%

    4,100 – 28,500

    4,240 – 29,990

    Higher Rate

    45%

    45%

    Over 28,500

    Over 29,990

    In order to calculate the amount received from income after tax, you need to know:

    • the allowances – income tax is not deducted from these
    • the bands into which income is allocated
    • the different rates at which income tax will be deducted from the bands

    For example, in 2013-14, someone aged 57 earning £20,000 per year, will:

    • have a tax-free allowance of £6,290
    • pay tax at 11% on £4,240
    • and pay tax at 18% on the remaining £9,470
    // @todo
    20. As the 2013-14 tax year begins, Jean’s annual salary is raised from £33,000 to £35,000. Compared with the previous year, how much more does he end up paying in income tax, given that he is 39 years-old?
  • 0
    0

    Explanation

    The correct answer is B.

    2012-13: 11% x £4,100 + 18% x (£33,000 – £4,100 – £5,235)

    = £4,710.70 

    2013-14: 11% x £4,240 + 18% x (£35,000 – £4,240 – £5,485)

    = £5,015.90, which is £305.20 more

    Post Comment

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