Eleanor has a gross income of €38500 for the year.
She has an annual tax credit of €3300.
The standard rate cut-off point is €33 800.
The standard rate of income tax is 20% and the higher rate is 40%.
(a) Find Eleanor’s net income for the year (i.e. after tax is paid).
Eleanor receives a pay rise. As a result, her net income for the year is €34780.
(b) Find Eleanor’s new gross income for the year.
yeah loads didn't I got an answer but idk if it was right
^ same, i got like 43000 (something around that)
Part B was 41200 (I actually guessed this in the exam and it happened to be right0
I eventually did after an hour its 41200. The question was sneaky as you needed to use algebra and treat the gross income as x
Here's how you work it out:
Gross income: x
€33800 . 20% = €6760 (I used the full stop as a multiplication sign so you wont be confused by it and the variable 'x')
(x - €33800) . 40% = 2/5(x - €33800) = 2/5x - €13520
Total Gross tax: €6760 + 2/5x - €13520 = 2/5x - €6760
Tax credit: €3300
Net tax (tax payable): 2/5x - €6760 - €3300 = 2/5x - €10060
Net income: €34780
We know that: Gross income - Net tax = Net income
So: x - (2/5x - €10060) = €34780
5x - (2x - €50300) = €173900 (Multiplied both sides by 5)
5x - 2x + €50300 = €173900 (Remember: double negatives gives you a positive)
3x = €123600
x = €41200
Therefore: the Gross income was €41200.
@damilola.adeniji.50 I must say, you're very lucky. Often people make an attempt at a question, but never arrive to the right answer. You, however, got it right! As long as you showed that a gross income of €41200 will give Eleanor (the person in the question) a net income of €34780, you would probably get full marks!
I got close to it i think. oh well...i used cross multiplication
i can't remember what i got i don't think it was 41200 but it worked out when i checked it backwards :(
How did I get here..