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Module 2

This document provides 14 examples of calculating income tax liability for various individuals in the UK for the 2018/19 tax year. It includes examples of individuals with employment income, trading income, bank interest, dividends, and donations to charity. The examples demonstrate how to calculate total income from different sources, apply the appropriate tax bands and rates, and determine final income tax payable.

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Sunitha Ram
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62 views6 pages

Module 2

This document provides 14 examples of calculating income tax liability for various individuals in the UK for the 2018/19 tax year. It includes examples of individuals with employment income, trading income, bank interest, dividends, and donations to charity. The examples demonstrate how to calculate total income from different sources, apply the appropriate tax bands and rates, and determine final income tax payable.

Uploaded by

Sunitha Ram
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MODULE 2

INCOME TAX COMPUTATION


Eg. 1. Mr Smith has been working for many years and received a salary of £50,850 per annum in 2018/19
(PAYE deducted in 2018/19 £8,000). He has no other sources of taxable income. Calculate the income
tax payable by Mr Smith for 2018/19.
Eg. 2. Billy had a trading profit of £26,500 and received bank deposit interest of £10,000 in
2018/19. Calculate Billy’s income tax liability in 2018/19.
Recalculate Billy’s income tax liability, assuming the bank deposit interest is now £20,000.

Eg. 3. Molly receives bank interest of £20,500 and no other income in 2018/19. Calculate
Molly’s income tax liability in 2018/19.

Eg. 4. Polly has a trading profit of £12,500 assessable in 2018/19 and receives bank interest of
£18,000. Calculate the income tax liability of Polly for 2018/19.

Eg. 5. Daisy received a salary of £18,500 (PAYE £1,400), received £10,000 bank deposit interest
and dividend income of £2,000 in 2018/19. Calculate Daisy’s income tax payable for 2018/19.

Eg. 6. Recalculate Daisy’s income tax payable, assuming Daisy received a salary of £36,500
(PAYE £5,000), bank deposit interest of £12,000 and dividend income of £2,000.

Eg. 7. Mike received gross employment income of £108,000 in 2018/19 of which £33,130 was
deducted at source under PAYE in 2018/19. Calculate Mike’s income tax payable for 2018/19.
Eg. 8. Ken made trading income of £130,000, received bank interest of £40,000 and dividend
income of £36,000 in 2018/19. Calculate Ken’s income tax liability for 2018/19.

Eg. 9. James has a trading income assessment in 2018/19 of £102,000 and received bank interest
of £4,000. Calculate the income tax liability of James for 2018/19

Eg. 10. David and Victoria are married and in 2018/19 David had a trading income assessment of
£8,000 and Victoria received a salary of £30,500.
Calculate the income tax liabilities of David and Victoria assuming that an election is made to
transfer 10% of David’s personal allowance to Victoria and state the date by which the election
should be made.
Eg. 11. Kathy has trading profit of £50,000 in 2018/19 and paid £1,000 interest on a loan to
purchase plant & machinery used in the business of her partnership. Calculate Kathy’s income
tax liability for 2018/19.

Eg. 12. Elliot has trading profit of £48,000 in 2018/19. He paid £1,600 to charity under the gift
aid system. Calculate Elliot’s income tax liability for 2018/19.

Eg. 13. Thomas earned £160,000 trading profit in 2018/19. In the tax year he paid £6,400 to
charity under the gift aid scheme. Calculate Thomas’s income tax liability for 2018/19.
Eg. 14. Kerry made a trading profit of £98,000 in 2018/19. In addition, she received bank interest
of £4,000 and dividend income of £6,000. She paid interest of £3,000 on a loan to contribute
capital into a partnership of which she is a partner. She made a payment of £4,800 to charity
under the gift aid scheme.
Calculate Kerry’s income tax liability for 2018/19.

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