Tx notes fa22 Final

June 2023 to March 2024 exams
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The personal allowance is reduced by £1 for every £2 by which a person’s adjusted net income 
exceeds £100,000. Therefore, a person with adjusted net income of £125,140 or more is not entitled 
to any personal allowance ((125,140 – 100,000)/2 = £12,570). 
 
Example 8 
Mike received gross employment income of £108,000 in 2022/23 on which £32,000 was deducted at 
source under PAYE in 2022/23.
Calculate Mike’s income tax payable for 2022/23. 
 
Example 9 
Ken made trading income of £130,000, received bank interest of £40,000 and dividend income of 
£36,000 in 2022/23.
Calculate Ken’s income tax liability for 2022/23. 
 
Example 10 
James has a trading income assessment in 2022/23 of £102,000 and received bank interest of 
£4,000.
Calculate the income tax liability of James for 2022/23.
4.1. Transferable amount of Personal allowance 
The transferable amount of personal allowance (also known as the marriage allowance or marriage 
tax allowance) is £1,260.
An election may be made to transfer a fixed amount of the PA to a spouse or civil partner - the 
amount is set at £1,260 for 2022/23. The election is only available when both taxpayers are either 
just basic rate taxpayers or non-taxpayers. The election is only likely to be made when one spouse is 
a non-taxpayer and has an amount of unused PA that would otherwise be wasted and the other 
spouse is only a basic rate taxpayer.
The election must be made within 4 years of the end of the tax year to which it should apply. The 
election will remain in force for future years until it is either withdrawn or the conditions are not met.
The relief is NOT given as an increase in the PA of the transferee, but as a tax credit to be deducted 
in deriving the tax liability of the transferee taxpayer and is taken at the basic rate of tax 20%: 
for 2022/23, computed as 1,260 x 20% = 252. 
This amount can only reduce the tax liability, it cannot create a repayment. 

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