Commentary

E1.910A Personal allowance—example

Personal and employment tax

E1.910A Personal allowance—example

E1.910A Personal allowance—example

This example illustrates a point made in E1.910.

Example 1—interaction between the personal allowance and foreign tax relief

Lydia, who lives in England, has a UK employment income for 2021/22 of £95,000 and overseas property income of £8,500 net of overseas tax of £11,500.

Her UK tax liability for 2021/22, before double taxation relief, is:

££
Employment income95,000
Overseas property income (£8,500 + £11,500)20,000
115,000
Deduct: personal allowance12,570
Less: (£115,000 – £100,000) × 50%(7,500)
(5,070)
109,930
Tax liability££
Non-savings income37,700@ 20%7,540
72,230@ 40%28,892
Total36,432

The tax liability, excluding overseas property income is:

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