Tx notes fa22 Final

Income tax liability
32,432
(W1) Total income = Net Income
110,000
Less Gift aid payment 1,600
×
100/80 =
(2,000)
Adjusted net income
108,000
Personal allowance
12,570
Less
1/2 
×
(108,000 – 100,000) =
(4,000)
Revised personal allowance
8,570

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3. Karl 
Karl Income tax computation 2022/23
Dividends
 
(W1) 
Adjusted Net income:
As Adjusted Net Income exceeds £125,140 the personal allowance is reduced to nil.
(W2)
Basic rate band 
£37,700 + £4,000 = £41,700
Higher rate band
£150,000 + £4,000 = £154,000
Note 1: The dividend income nil rate band is £2,000 no matter what other income of the taxpayer. 
The rest of the dividend income falls partly in the remaining higher rate band which is taxed at 
33.75% and partly in the additional rate band which is taxed at 39.35%.
Non 
savings 
Dividends
Total
£
£
£
Employment income
140,000
140,000
Dividend Income 
30,000
30,000 
Total income
140,000
30,000
170,000
Less reliefs
Qualifying interest
(3,000)
(3,000)
Net income
137,000
30,000
167,000
Less Personal allowance (W1)
(–)
(–)
Taxable income
137,000
30,000
167,000
Income Tax: 
Non savings (W2)
41,700 
×
20% =
8,340
95,300 
×
40% =
38,120
note 1 2,000 @ 0% 
0
(154,000 - (137,000 + 2,000)) = 15,000 @ 33.75%
5062
13,000 @ 39.35%
5,116