Question

Megan is checking her rax bill for the last year. The tax rates were as follows: No tax on the first £11 000 Earnings in excess of £11 000 and up to £43 000 taxed at a rate of 20% Earnings in excess of £43 000 and up to £150 000 taxed at a rate of 40% Esrnings over £150 000 taxed at a rate of 45% Last year, Megan earned £158 900. How much tax did she pay in total

Answer 1

Answer: £53,205

Explanation:

As Megan is in the highest tax bracket, she will have to pay the maximum tax in each bracket up till her own.

Bracket 1 = (11,000 - 0) * 0% = £0

Bracket 2 = (43,000 - 11,000) * 20% = £6,400

Bracket 3 = (150,000 - 43,000) * 40% = £42,800

Bracket 4 = (158,900 - 150,000) * 45% = £4,005

Total tax = 6,400 + 42,800 + 4,005

= £53,205