Hi,
I do not fully understand the answer to Q2.
Here the corporation tax is calculated as (BLAGAB profit + Non-BLAGAB profit) * corporation tax rate = (250 + 260) * 25%.
However, although the Non-BLAGAB profit should be taxed based on the trading profit, the BLAGAB part should be taxed on 'I - E' basis. The BLAGAB I - E is given as 520. I do not fully understand why the BLAGAB profit of 250 is used instead here.
And on policyholder tax, it is calculated as (BLAGAB I - E - BLAGAB profit) * policyholder tax rate = (520 - 250) * 20% according to the answer given. Apparently there is no tax to policyholder for the Non-BLAGAB profit, but I do not know why. In addition, I also do not understand why it is calculated as (BLAGAB I - E - BLAGAB profit) for the amount the tax is applicable for policyholder.
Could someone help?
I do not fully understand the answer to Q2.
Here the corporation tax is calculated as (BLAGAB profit + Non-BLAGAB profit) * corporation tax rate = (250 + 260) * 25%.
However, although the Non-BLAGAB profit should be taxed based on the trading profit, the BLAGAB part should be taxed on 'I - E' basis. The BLAGAB I - E is given as 520. I do not fully understand why the BLAGAB profit of 250 is used instead here.
And on policyholder tax, it is calculated as (BLAGAB I - E - BLAGAB profit) * policyholder tax rate = (520 - 250) * 20% according to the answer given. Apparently there is no tax to policyholder for the Non-BLAGAB profit, but I do not know why. In addition, I also do not understand why it is calculated as (BLAGAB I - E - BLAGAB profit) for the amount the tax is applicable for policyholder.
Could someone help?