William earns £120,000 per year from his job, and is entitled to a diesel company car and all fuel (business and private). The car has a list price of £28,000, but was purchased at a discount for £26,500. It has emissions of 173 g/km.
William makes cash contributions of £600 per year to charities under the gift aid scheme.
Calculate William’s tax liability (to the nearest £), using the following table.
Workings
Salary
Car benefit
Fuel benefit
Personal allowance
Taxable income
Tax at 20%
Tax at 40%
Total tax liability
£
practice assessment 1
Task 2
(a)
(1)
3
On 6 July 2014, Mark was provided with a company loan of £4,500 on which he pays interest at 1.5% per annum. The official rate of interest is 3.25%.
What is the benefit in kind for 2014/15?
(a) Nothing
(b) £146.25
(c) £78.75
(d) £59.06
(2)
Doris uses her own car for business travelling. During the tax year she travelled 11,500 business miles for which she was paid 20p per mile by her employer. The impact of this is:
(a) She will have a taxable amount of £2,300
(b) She will claim an allowable expense of £2,875
(c) She will claim an allowable expense of £2,575
(d) There is no impact on tax
(3)
Rob has a personal pension scheme to which he contributes 5% of his salary in cash. His employer does not contribute. His salary is £30,000. The impact of this is:
(a) His taxable salary will be reduced by £1,500
(b) His taxable salary will be reduced by £1,875
(c) His basic rate band will be extended by £1,500
(d) His basic rate band will be extended by £1,875
(4)
Sandra paid £900 in the tax year entertaining her company’s clients. Her manager felt that this was excessive and only reimbursed her £780. The impact of this is:
(a) No net impact on tax
(b) An allowable deduction of £120
(c) A benefit of £780
(d) An allowable deduction of £900
(e) A benefit of £120
4
(b)
personal tax (Finance Act 2014) tutor zone
Using the following table, analyse the benefits into those that are exempt from tax, and those that are taxable.
Description
A low interest loan of £12,000
Free workplace parking
Use of company van for journeys to and from work and business journeys Subsidised meals in a staff restaurant available to all staff
Gratuities (tips) given to staff by members of public
Payment of up to £5,000 qualifying award under staff suggestion scheme Use of pool car for business journeys
Relocation costs up to £8,000 due to a change in place of work
Free childcare provided by employer in workplace creche
Exempt
Taxable
practice assessment 1
Task 3
(a)
5
Analyse each of the following examples of expenditure on a residential property that is rented out into whether they are allowable for tax purposes or not.
Expenditure
Loan interest
Council tax
Management charges for lettings
Legal fees for purchase of property
Depreciation of furniture
Redecoration
Loan repayments
Allowable
Not allowable
6
(b)
personal tax (Finance Act 2014) tutor zone
Dave has two properties in addition to his home, details of which are as follows:
Two bedroom house:
(1)
(2)
This unfurnished house was purchased in a poor condition at the beginning of the tax year with the intention of letting it out. It was rented from 1 July for £750 per month.
Dave paid £250 building insurance for the year. He also spent £10,000 installing a new kitchen and bathroom in the house before he was able to rent it out.
(3)
Dave paid £300 to his managing agent to find a tenant, and also a charge of 10% of the rent received as a management fee.
(1)
This furnished flat is rented out for £580 per month. The property was rented all tax year.
One bedroom flat:
(2)
Dave spent £600 repainting the windows and doors in the flat. He also paid buildings and contents insurance of £300 for the year.
