Question

British Tax can sometimes be complicated and may dig a big hole in your pocket. Many individuals are trying to seek advice and save on the amount of tax payable to the UK government. You are an ACCA qualified individual specializing in UK tax and have advised many clients over managing their finances. One of your clients, Ms. Joy has been following your advice on investments and ways to manage money earned in the tax year. As per your instructions she has invested and has received £14,500 as interest from building society but she reported only £ 14,000 after deducting £500 as allowance. Ms. Joy also entered into a partnership and had to contribute capital for the same. She availed a loan, half of which was used as her capital contribution in the partnership firm and paid £ 3500 as interest in the year on the entire loan amount. She also received Interest of £ 15,000 from National Savings and Investment Certificates and has also earned £500 on treasury stock. She has suffered a PAYE amounting to £2,000. She had invested in shares of British companies and has received £12,000 as dividend for 2018-19. Ms. Joy is employed and receives salary income of £ 31845 from the company. Ms. Joy has availed a loan of £7000 from her employer at 2.25% per annum. The ORI for 2018-19 stands at 2.5%. Bonus is paid in the month of August every year and relates to the turnover she has achieved up to 31st December every year. Her bonus of £5800 for 2016 was received in August 2017 and bonus of 2017 amounting to £4000 was received in August 2018. She made a payment of £2400 under the gift aid scheme. Her income from an individual savings account amounts to £ 1,200. Joy’s employer did not provide car for her office duty purposes in UK in the year 2018-19. She used her own car for business travel. During 2018-19, she drove 18,300 miles in the performance of her duties and got paid @ 60p for a mile. Being an expert in UK tax laws, you are requested assist Ms. Joy in finding out her tax liability for 2018-19.

Answer 1

Ms Joy income tax liability and her income tax payable for 2018 - 2019

Particulars	Non Savings	Savings	Dividend	Total
Building Society Interest	-	14500	-	-
Salary	31845	-	-	-
Dividends	-	-	12000	-
Income from Individual savings account	-	1200	-	-
Income from National savings and Investment certificate	-	15000	-	-
Income from Treasury Stock	500	-	-
Net Income	32345	30700	12000	75045
less : Interest paid	3500	-	-	-
Taxable income	28845	30700	12000	71545

Income tax calculation

Gift aid paid 2400 - as basic and higher bands 3000 - (2400*100/80)

Hence basic rate band is therefore increased from 28845 to 31845

Non savings

31845 @20 %