Chapter 19 - Loans to Employees & Use of Assets

Question 1

Will the employee have a taxable benefit if the aggregate of all loans throughout the tax year is £10,000 or less?

Answer 1

No

This provision is intended to exclude things like season ticket loans for trains

Question 2

How do you calculate the average loan outstanding during the year?

Answer 2

(loan at 6 April + loan at 5 April) / 2 x average ORI for tax year

Question 3

True or false

If the employee is required to pay interest on the loan, this increases the cash equivalent

Answer 3

False

This will reduce the cash equivalent

Question 4

Paul borrowed £100,000 from his employer. Paul repaid £20,000 of the loan on 1 December. Calculate the benefit using the average basis

Answer 4

(100,000 + 80,000_ / 2 = 90,000 x 2.25%

£2,2025

Question 5

Paul borrowed £100,000 from his employer. Paul repaid £20,000 of the loan on 1 December. Calculate the benefit using the strict basis

Answer 5

100,000 x 8/12 x 2.25% = £1,500

80,000 x 4/12 x 2.25% = £600 = £2,100

Question 6

True or false

If a loan is written off by the employer, the amount is treated as interest

Answer 6

False

The amount is treated as earnings

Question 7

What is the value of an asset the higher of?

Answer 7

1. The annual value of the use of the asset

or

2. The sums paid by the employer in providing the asset by way of rent or hire

Question 8

What is the annual value of the asset at the time it was first made available to the employee?

Answer 8

20% of the market value

Question 9

If an asset which has been lent to an employee is subsequently given to an employee, the benefit will be the higher of what?

Answer 9

1. The market value of the asset at the date it was transferred to the employee

or

2. The market value at the date it was lent to the employee less any amounts which have been charged to tax

Question 10

What is the benefit for the transfer of a car?

Answer 10

The market value of the car at the date of transfer minus any payments made by the employee

Question 11

True or false

A computer provided to an employee is always a taxable benefit

Answer 11

False

A computer that is wholly for business use is not a taxable benefit

Question 12

How do you calculate the taxable benefit for an employee who uses their computer for both business & non-business purposes?

Answer 12

1. Calculate the benefit using the 20% rule
2. Deduct the business proportion to calculate the taxable benefit