Note 1: The same as Jeremy, Henrietta also received the Personal Allowance. In this case, we assume that Henrietta also received £10,000 as PA. In this case, the £10,000 will be split into £3,500 to deduct in non – saving income and the rest of £10,000 is deducted at saving income. The reason to deduct the non – saving income first is that the highest tax rate of non – saving is 45% while as the highest rate of saving income is 40%, lower 5% than the non – saving income. This deduction will help Henrietta reduce the tax payable.Note 2: According to UK’s law, the starting rate for saving income is 10% in 2014-15. The 10% only apply when the amount less than £2,880. (UK Government)Note 3: The tax that Henrietta already pay when she received the bank interest. In this case we grossed it up to calculate the tax so that we need to minus it. All amounts only be taxed once.Note 4: Because Henrietta already pays more tax than her tax liability so that she will receive the residual amount.
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