Calculate the deduction for notional income tax using the
appropriate tax allowance, the lower rate of tax and if appropriate
the basic rate and higher rate of tax for the
tax assessment year in which the application was made. To
decide the amount of the deduction the decision maker should
1) take the gross weekly earnings
Note If the total weekly proportion of the 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 income
3) calculate the weekly limit for the lower rate 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 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 Calculate the weekly rate of income tax and personal
allowance by dividing the annual rate by 365 and multiplying the
result by 7.
