GARETH AND ANGELA

(a) Gareths income for the tax year 2019/20 comprised the following:

State retirement pension 6,426

Pension from former employer 17,255

Building society interest 4,185

National lottery winnings 10,000

Required:

Calculate Gareths income tax liability for the tax year 2019/20.

(9 marks)

(b) Angelas income and expenditure for the tax year 2019/20 comprised the following:

State retirement pension 8,126

Dividends 88,889

NS&I Investment account interest 9,205

Charitable donation under the gift aid scheme 2,000

Required:

Calculate Angelas income tax liability for the tax year 2019/20.

(6 marks)

(Total 15 marks)

1. You should assume that the tax rates and allowances for the tax year 2019/20 and for the financial year to 31 March 2018 will continue to apply for the foreseeable future unless you are instructed otherwise. ACCA UK TAX RATES

Income tax

Income tax

Normal rates Dividend rates

% %

Basic rate 1 - 37,500 20 7.5

Higher rate 37,501 - 150,000 40 32.5

Additional rate 150,001 and above 45 38.1

Savings income nil rate band - Basic rate taxpayers 1,000

-Higher rate taxpayers 500

Dividend nil rate band 2,000

A starting rate of 0% applies to savings income where it falls within the first 5,000 of taxable income..

Personal allowances

Personal allowance 12,500

Transferable amount 1,200

Income limit 100,000

Where adjusted net income is 125,000 or more, the personal allowance is reduced to zero.