Tx notes fa22 Final

June 2023 to March 2024 exams
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2.2. Tax liability and Tax Payable 
Having calculated the taxable income, the next part of the computation is to compute the Tax 
Liability and/or the Tax Payable of the taxpayer;
(a)
Tax liability
=
income tax on taxable income
(b)
In calculating the Tax Liability it is necessary to take each part of the Taxable Income in order, 
non savings income followed by savings income and finally the dividend income as these 
sources of taxable income have di
ff
erent tax rates that apply to them and rates that also 
change depending on how much taxable income the taxpayer has
(c)
Tax payable
= 
tax liability
LESS
tax already deducted at source, 
Pay As You Earn (PAYE) on employment income 
2.3.
 
Taxation of non-savings income. 
Non-savings taxable income is taxed at the following rates:
2.4. Non-savings income consists of: 
(a)
Trading Profit - see chapters 4-8
(b)
Employment Income - see chapter 9
(c)
Property Income - see chapter 3
 
Example 1 
Mr Smith has been working for many years and received a salary of £62,500 per annum in 2022/23 
(PAYE deducted in 2022/23 is £12,000). He has no other sources of taxable income.
Calculate the income tax payable by Mr Smith for 2022/23. 
£1 to £37,700
20%
(basic rate)
£37,701 – 150,000
40%
(higher rate)
£150,001 +
45%
(additional rate)

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