Using the rates of tax appropriate to the tax year (6 April - 5
April) in which the application was made, calculate notional income
tax as follows
1) take the gross weekly earnings
Note If the total weekly proportion of tax allowance appropriate to the applicant exceeds the figure in 1. there is no tax liability and no need to continue with 2. to 7.
2) deduct the weekly proportion of the personal allowance (DMG
Appendix 1) to establish the weekly taxable income
3) calculate the weekly limit for the lower rate of tax
and
3.1 where the weekly limit is more than the result of the calculation at 2. multiply the figure at 2. by the percentage rate for the lower rate of tax.
OR
3.2 where the weekly limit is the same as or less than the result of the calculation at 2., multiply the weekly limit by the percentage rate for the lower rate of tax
4) after the calculation at
3.2, multiply any balance of weekly taxable income by the
basic rate of tax
5) add together
3. and
4.
6) where the married couples allowance or the additional
personal allowance is appropriate (DMG Appendix 1), the appropriate
percentage of the weekly proportion of that allowance should be
deducted from the total at
5.
7) round up where necessary
Note In DMG 26055 above, calculate the weekly rate of income
tax and personal allowance by dividing the annual rate by 365 and
multiplying the result by 7)
1) Estimated gross weekly earnings 205.75
estimated gross earnings exceed allowances
therefore tax is due
2) less weekly proportion of the personal 80.45
allowance
taxable weekly income125.30
3) weekly limit for lower rate of tax 82.45
weekly limit is lower than taxable weekly
income therefore weekly limit multiplied by
percentage rate for lower rate of tax (20%)
16.49
4) balance of taxable weekly income and 44.85
weekly proportion of personal allowance
multiplied by percentage rate for basic 10.32
rate of tax (23%)
5) total of
3. and 4)
26.81
6) less the percentage (10%) of the weekly 3.64
proportion of the additional personal allowance
7) Notional income tax 23.17
1) Estimated gross weekly earnings 159.95
estimated gross earnings exceed allowances
therefore tax is due
2) less weekly proportion of the personal 80.45
allowance
taxable weekly income 79.50
3) weekly limit for lower rate of tax 82.45
weekly limit is higher than taxable weekly
income therefore taxable weekly income
multiplied by percentage rate for lower
rate of tax (20%)
15.90
4) No balance to be multiplied by percentage
rate for basic rate of tax
5) total of
3. and 4)
15.90
6) less the percentage (10%) of the weekly 3.64
proportion of the additional personal
allowance
7) Notional income tax 12.26
