Illustration - "Ava"

In this lesson

1. 0:00 Ava's income tax scenario overview
2. 0:31 Calculating taxable income and personal allowance
3. 1:16 Basic rate band extension with Gift Aid
4. 2:06 Savings income and nil rate band application
5. 2:29 Income tax liability versus payable

About this lesson

This illustration walks through Ava's tax position, showing how Gift Aid donations extend the basic rate band, affect the tax calculation across non-savings and savings income, and ultimately determine the final tax payable after deductions at source. This technique is essential for TX (Taxation) and applies directly to exam scenarios involving blended income and relief claims. The worked example covers the core steps: identifying all income sources and calculating total income, applying the personal allowance correctly, grossing up Gift Aid donations to extend the basic rate band, and then calculating tax at the appropriate rates for each income type. You'll see how higher rate taxpayers access the savings income nil rate band, and the crucial final step of deducting tax already paid to arrive at the actual amount due. This methodical approach ensures you don't miss the interaction between relief claims and tax bands—a common exam pitfall that costs marks.

Duration: 3m