10% starting rate tax for savings income (F6 - UK Version)

[stubarny]

Hi everyone,

According to the F6 (UK version) ACCA exam cover sheets, "a starting rate of 10% applies to savings income where it falls within the first £2320 of taxable income".

In the answers to question 1)c)i) of the December 2009 past paper (Questions: http://www.accaglobal.com/pubs/stude...2009_dec_q.pdf Answers: http://www.accaglobal.com/pubs/stude...09_dec_ans.pdf) only the dividend is listed under "income tax" in the starting rate band, but both building society interest and dividends are listed under "tax suffered at source".

Why is building society interest not included in the calculation of starting rate tax (i.e. why is starting rate tax not (1200 + 700)*0.1=£190 instead of 1200*0.1=£120 as written in the answers?

Many thanks,

Stu

[Z.Cam]

Dividend income is taxed 10% when total taxable income falls within the first 34,800
However, savings income is taxed 10% when total taxable income (other than savings) falls within the first 2,320.

Na Style total taxable income that year was 26,900, and since non-savings income is always taxed first, the 10% rate for savings couldn't be applied. But 26,900 is still less than 34,800. So up to 7,900 can be taxed at the basic rate (10% for dividends).

[AliSharifazadeh]

sorry, but AFIK, the basic rate tax limit is 37,400, isn't it?