imported>Doug Williamson |
imported>Doug Williamson |
| Line 1: |
Line 1: |
| __NOTOC__
| | 1. |
| Periodic yield is a rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start.
| |
|
| |
|
| | A reduction in a tax liability, directly reducing the net amount of tax payable. |
|
| |
|
| ====Example 1====
| | For example, the tax credit under the 'imputation system' which wholly or partially imputes to the shareholders some of the corporation tax paid by companies on the income out of which dividends are paid. |
|
| |
|
| GBP 1 million is borrowed or invested.
| | In some circumstances a net amount of tax repayable, resulting from certain types of tax credit, can be refunded to the taxpayer in cash. |
|
| |
|
| GBP 1.03 million is repayable at the end of the period.
| |
|
| |
|
| | 2. |
|
| |
|
| The periodic yield (r) is:
| | Less commonly, a smaller indirect reduction in a tax liability, by way of a deduction from the net taxable profits. |
|
| |
|
| r = (End amount / start amount) - 1
| |
|
| |
|
| Which can also be expressed as:
| | 3. |
|
| |
|
| r = (End / Start) - 1
| | ''UK personal tax''. |
|
| |
|
| ''or''
| | A payment from the UK tax authorities to an individual with childcare responsibilities, low income, or both. |
|
| |
|
| r = <math>\frac{End}{Start}</math> - 1
| |
|
| |
|
| | == See also == |
| | * [[Credit]] |
| | * [[Credit relief]] |
| | * [[Expense relief]] |
| | * [[Deductions]] |
| | * [[Foreign tax credit]] |
| | * [[Imputation system]] |
| | * [[Tax relief]] |
|
| |
|
| = <math>\frac{1.03}{1}</math> - 1
| | [[Category:Accounting,_tax_and_regulation]] |
| | |
| = 0.03
| |
| | |
| = '''3%'''
| |
| | |
| | |
| ====Example 2====
| |
| | |
| GBP 0.97 million is borrowed or invested.
| |
| | |
| GBP 1.00 million is repayable at the end of the period.
| |
| | |
| | |
| The periodic yield (r) is:
| |
| | |
| r = <math>\frac{End}{Start}</math> - 1
| |
| | |
| | |
| = <math>\frac{1.00}{0.97}</math> - 1
| |
| | |
| = 0.030928
| |
| | |
| = '''3.0928%'''
| |
| | |
| | |
| ''Check:''
| |
| | |
| Amount at end = 0.97 x 1.030928 = 1.00, as expected.
| |
| | |
| | |
| ====Example 3====
| |
| | |
| GBP 0.97 million is invested.
| |
| | |
| The periodic yield is 3.0928%.
| |
| | |
| Calculate the amount repayable at the end of the period.
| |
| | |
| | |
| '''''Solution'''''
| |
| | |
| The periodic yield (r) is defined as:
| |
| | |
| r = <math>\frac{End}{Start}</math> - 1
| |
| | |
| | |
| ''Rearranging this relationship:''
| |
| | |
| 1 + r = <math>\frac{End}{Start}</math>
| |
| | |
| | |
| End = Start x (1 + r)
| |
| | |
| | |
| ''Substituting the given information into this relationship:''
| |
| | |
| End = GBP 0.97m x (1 + 0.030928)
| |
| | |
| = '''GBP 1.00m'''
| |
| | |
| | |
| ====Example 4====
| |
| | |
| An investment will pay out a single amount of GBP 1.00m at its final maturity after one period.
| |
| | |
| The periodic yield is 3.0928%.
| |
| | |
| Calculate the amount invested at the start of the period.
| |
| | |
| | |
| '''''Solution'''''
| |
| | |
| As before, the periodic yield (r) is defined as:
| |
| | |
| r = <math>\frac{End}{Start}</math> - 1
| |
| | |
| | |
| ''Rearranging this relationship:''
| |
| | |
| 1 + r = <math>\frac{End}{Start}</math>
| |
| | |
| | |
| Start = <math>\frac{End}{(1 + r)}</math>
| |
| | |
| | |
| ''Substitute the given data into this relationship:''
| |
| | |
| Start = <math>\frac{1.00}{(1 + 0.030928)}</math>
| |
| | |
| | |
| = '''GBP 0.97m'''
| |
| | |
| | |
| ''Check:''
| |
| | |
| Amount at start = 0.97 x 1.030928 = 1.00, as expected.
| |
| | |
| | |
| ====Effective annual rate====
| |
| | |
| The periodic yield (r) is related to the [[effective annual rate]] (EAR), and each can be calculated from the other.
| |
| | |
| | |
| ==See also==
| |
| | |
| *[[Effective annual rate]]
| |
| *[[Discount rate]]
| |
| *[[Nominal annual rate]]
| |
| *[[Periodic discount rate]]
| |
| *[[Yield]]
| |
1.
A reduction in a tax liability, directly reducing the net amount of tax payable.
For example, the tax credit under the 'imputation system' which wholly or partially imputes to the shareholders some of the corporation tax paid by companies on the income out of which dividends are paid.
In some circumstances a net amount of tax repayable, resulting from certain types of tax credit, can be refunded to the taxpayer in cash.
2.
Less commonly, a smaller indirect reduction in a tax liability, by way of a deduction from the net taxable profits.
3.
UK personal tax.
A payment from the UK tax authorities to an individual with childcare responsibilities, low income, or both.
See also
