Daphne earns an annual wage of £18900. She doesn't pay tax on the first £10600 that she earns. How much tax does she pay if the rate of the tax on the rest of her wage is:
a) 20%
b) 40%
a) Daphne pays 20% tax on the amount of her wage above £10600.
The amount of her wage above £10600 is £18900 - £10600 = £8300.
The tax she pays is 20/100 * £8300 = £1660.
b) Daphne pays 40% tax on the amount of her wage above £10600.
The amount of her wage above £10600 is £18900 - £10600 = £8300.
The tax she pays is 40/100 * £8300 = £3320.