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3 parts
a

K£ 19,200\text{K£ } 19,200

b

Kshs. 5,100\text{Kshs. } 5,100

c

Kshs. 22,300\text{Kshs. } 22,300

Step-by-step solution

9 steps

Here's the solution to the problem:

Part a· 3 steps

His taxable income in K£ p.a.

  1. Calculate Mr.

    Kinoti's total monthly income in Kshs.

    Total monthly income=Basic salary+House allowance+Medical allowance\text{Total monthly income} = \text{Basic salary} + \text{House allowance} + \text{Medical allowance} Total monthly income=Kshs. 24,000+Kshs. 5,000+Kshs. 3,000\text{Total monthly income} = \text{Kshs. } 24,000 + \text{Kshs. } 5,000 + \text{Kshs. } 3,000 Total monthly income=Kshs. 32,000\text{Total monthly income} = \text{Kshs. } 32,000

  2. Calculate his total annual income in Kshs.

    Total annual income=Total monthly income×12\text{Total annual income} = \text{Total monthly income} \times 12 Total annual income=Kshs. 32,000×12=Kshs. 384,000\text{Total annual income} = \text{Kshs. } 32,000 \times 12 = \text{Kshs. } 384,000

  3. Convert the annual income from Kshs.

    to K£.
    (Assume 1 K£ = 20 Kshs.)

    Taxable income in K£ p.a.=Total annual income in Kshs.20 Kshs./K£\text{Taxable income in K£ p.a.} = \frac{\text{Total annual income in Kshs.}}{20 \text{ Kshs./K£}} Taxable income in K£ p.a.=384,00020=19,200 K£ p.a.\text{Taxable income in K£ p.a.} = \frac{384,000}{20} = 19,200 \text{ K£ p.a.}
    • K£ 19,200\boxed{\text{K£ } 19,200}

Part b

Kshs. 5,100\text{Kshs. } 5,100

The monthly tax that he paid.

  1. Calculate the annual gross tax using the provided tax rates.

    • First K£ 5,600: 5,600×2=Kshs. 11,2005,600 \times 2 = \text{Kshs. } 11,200
    • Next K£ (8,800−5,600)=3,200(8,800 - 5,600) = 3,200: 3,200×3=Kshs. 9,6003,200 \times 3 = \text{Kshs. } 9,600
    • Next K£ (12,000−8,800)=3,200(12,000 - 8,800) = 3,200: 3,200×4=Kshs. 12,8003,200 \times 4 = \text{Kshs. } 12,800
    • Next K£ (15,200−12,000)=3,200(15,200 - 12,000) = 3,200: 3,200×5=Kshs. 16,0003,200 \times 5 = \text{Kshs. } 16,000
    • Next K£ (18,400−15,200)=3,200(18,400 - 15,200) = 3,200: 3,200×6=Kshs. 19,2003,200 \times 6 = \text{Kshs. } 19,200
    • Remaining K£ (19,200−18,400)=800(19,200 - 18,400) = 800: 800×7=Kshs. 5,600800 \times 7 = \text{Kshs. } 5,600
    Total annual gross tax=11,200+9,600+12,800+16,000+19,200+5,600\text{Total annual gross tax} = 11,200 + 9,600 + 12,800 + 16,000 + 19,200 + 5,600 Total annual gross tax=Kshs. 74,400\text{Total annual gross tax} = \text{Kshs. } 74,400

  2. Calculate the annual personal relief.

    Annual personal relief=Kshs. 1,100 per month×12 months\text{Annual personal relief} = \text{Kshs. } 1,100 \text{ per month} \times 12 \text{ months} Annual personal relief=Kshs. 13,200\text{Annual personal relief} = \text{Kshs. } 13,200

  3. Calculate the annual net tax (PAYE).

    Annual net tax=Total annual gross tax−Annual personal relief\text{Annual net tax} = \text{Total annual gross tax} - \text{Annual personal relief} Annual net tax=Kshs. 74,400−Kshs. 13,200=Kshs. 61,200\text{Annual net tax} = \text{Kshs. } 74,400 - \text{Kshs. } 13,200 = \text{Kshs. } 61,200

  4. Calculate the monthly tax paid.

    Monthly tax=Annual net tax12\text{Monthly tax} = \frac{\text{Annual net tax}}{12} Monthly tax=Kshs. 61,20012=Kshs. 5,100\text{Monthly tax} = \frac{\text{Kshs. } 61,200}{12} = \text{Kshs. } 5,100
    • Kshs. 5,100\boxed{\text{Kshs. } 5,100}

Part c

Kshs. 22,300\text{Kshs. } 22,300

If his total deductions per month amounted to Kshs. 9,700, calculate his net income per month.

  1. Identify the total monthly income.

    From part (a), Mr. Kinoti's total monthly income is Kshs. 32,000.

  2. Calculate the net income per month.

    Net income per month=Total monthly income−Total monthly deductions\text{Net income per month} = \text{Total monthly income} - \text{Total monthly deductions} Net income per month=Kshs. 32,000−Kshs. 9,700\text{Net income per month} = \text{Kshs. } 32,000 - \text{Kshs. } 9,700 Net income per month=Kshs. 22,300\text{Net income per month} = \text{Kshs. } 22,300
    • Kshs. 22,300\boxed{\text{Kshs. } 22,300}
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