Chapter 16 - Employment Income & Benefits Flashcards
Define Net Deductions
Earnings LESS any deductions allowed from those earnings
What is the receipts basis?
Employees are generally taxed on their earnings at the date of receipt
Employees charged on the receipts basis for cash payments are taxed on the earlier of what 2 rules?
Rule 1 - the date the payment is physically made
Rule 2 - the date the employee becomes legally entitled to the payment
True or False
The date of receipt and the date on which the services were performed will ALWAYS be the same date
False
The two dates are often different
What are the 3 dates under Rule 3 when taxing directors?
A. When sums on account of the directors earnings are credited in the company accounts
B. At the end of the company accounting period if earnings have been determined by the end of that period
C. The date earnings are determined if that date falls after the end of the company accounting period
The majority of taxable benefits are taxed in the hands of who?
The employee
Define the ‘Cash Equivelant’
The cost of any benefit less any part of the cost made good by the employee to the persons providing the benefit
The ‘cost; of the benefit is the cost to the employer providing that benefit
True or false
Any amounts paid by the employee to the employer towards the provision of the benefit can be deducted from the cash equivelant
True
List some examples of benefits which have special rules in place for calculating their cash equivalent
Examples include:
Car & fuel benefits
Accommodation
Cheap Loans
Instances where an employer loans an asset to an employee
True or false
Income from pensions (such as state pension) are generally taxable
True
In what instance does a ‘high income child benefit charge’ apply?
Where a recipient or their partner has an adjusted net income in excess of £50,000
