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A woman aged under 65 has the following
income in 2006/07:
Profit from self-employment: £26,000
Employment
earnings: £11,000
Dividends plus tax
credits: £8,000
Chargeable gain from selling shares: £10,000 (after
indexation and taper relief).
She makes a contribution to a personal pension scheme of
£5,000 gross, paying £3,900 net.
Her tax liability is
calculated as follows:
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Earnings
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Dividends
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Gains
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Total
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£
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£
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£
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£
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Income/gains
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37,000
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8,000
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10,000
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55,000
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Less -
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Personal
allowance
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(5,035)
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(5,035)
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Annual
exemption
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(8,800)
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(8,800)
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Taxable
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31,965
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8,000
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1,200
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41,165
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Starting
rate:
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£2,150
at 10%
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215.00
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215.00
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Basic
rate on earnings:
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£29,815
at 22%
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6,559.30
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6,559.30
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(£31,965-£2,150)
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Basic
rate on dividends:
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£6,335
at 10%
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633.50
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633.50
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(£33,300+£5,000*-£31,965)
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Higher
rate on dividends:
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£1,665
@ 32.5%
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541.12
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541.12
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(£8,000-£6,335)
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Capital
gains tax
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£1,200
@ 40%
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480.00
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480.00
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Total
tax
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6,774.30
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1,174.62
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480.00
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8,428.92
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Amount
payable
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£8,428.92
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(before
deduction of dividend tax credits and other amounts paid)
*Higher rate tax relief on the pension payment is given
by extending the basic rate tax band by the amount of the gross payment.
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The Dyer Partnership, 17 Westminster Court,
Hipley Street,
Old Woking, Surrey GU22 9LG
Copyright © 2002 - 2006 The Dyer Partnership
Limited
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