Question

Megan is checking her tax bill for the last year.

The tax rates were as follows:

• No tax on the first £11 000 of earnings

• 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%

• Earnings over £150 000 taxed at a rate of 45%

Last year, Megan earned £158 900 before tax.

How much tax did she pay in total?

Answer 1

£53205

Explanation:

The computation is shown below:

£11,000 = $0

In excess of £11,000 and up to £43,000 the tax rate is 20%

So the tax amount is

= (£43,000 - £11,000) × 20%

= £6,400

In excess of £43,000 and up to £150,000 the tax rate is 40%

So the tax amount is

= (£150,000 - £43,000) × 40%

= £42,800

And, the remaining amount is

= (£158,900 - £150,000) × 45%

= £4,005

So the total tax paid amount is

= £0 + £6,400 + £42,800 + £4,005

= £53,205