(ii) Explain how the inclusion of rental income in Coral’s UK income tax computation could

(ii) Explain how the inclusion of rental income in Coral’s UK income tax computation could affect the

income tax due on her dividend income. (2 marks)

You are not required to prepare calculations for part (b) of this question.

Note: you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year to

31 March 2007 will continue to apply for the foreseeable future.

(ii) The effect of taxable rental income on the tax due on Coral’s dividend incomeRemitting rental income to the UK may cause some of Coral’s dividend income currently falling within the basic rateband to fall within the higher rate band. The effect of th