Employment Income

Question 1

What is the basis of assessment for employment income?

Answer 1

Receipts Basis

Question 2

When are most earnings (Not directors) deemed to be recieved?

Answer 2

Earlier of:

1) The actual payment date
2) The date on which the individual become entitled to the payment
* Non monetary earnings are deemed to be received when the benefit is received by the employee
* Rules for directors are different

Question 3

What is the criteria for an employee allowable deduction?

Answer 3

1) The employee is obliged to incur and pay the expense

2) The expense is wholly, exclusively and necessary

Question 4

When is travel between work and home and allowable employee expense? (3)

Answer 4

1) If the employee has no normal place of work
2) If the employees home is his normal place of work
3) If the employee is at a temporary workplace ( <24 months)

Question 5

What is the statutory mileage rate scheme (SMRS( per mile for a car?

Answer 5

• 45p for first 10,000
• 25p thereafter
• 5p for a passenger

Question 6

What is the statutory mileage rate scheme (SMRS( per mile for a Motorcycle?

Answer 6

24p

Question 7

What is the statutory mileage rate scheme (SMRS( per mile for a Bicycle?

Answer 7

20p

Question 8

When does a benefit classify as trivial? (3)

Answer 8

1) The cost of providing the benefit does not exceed £50
2) It is not cash or a voucher
3) It is not provided in recognition of a birthday
e. g. a Birthday present

Question 9

How do you calculate the taxable benefit on living accommodation if the employer owns the property?

Answer 9

1) Rateable value (given)

+

2) Extra charge ONLY if the original cost of the house plus capital improvements before the start of the tax year > 75,000
* EXTRA CHARGE

(Cost - £75,000) * Official rate of interest (2.25>2020)

Question 10

How do you calculate the taxable benefit on living accommodation if the employer rents the property?

Answer 10

Higher of:

1) Rateable value (given)
2) Rent paid by employer

Question 11

How are the taxable benefit ‘Assets lent for private use’ calculated if the employer owns the assets?

Answer 11

Annual value

• 20% * market value when first provided for employee use

Question 12

How are the taxable benefit ‘Assets lent for private use’ calculated if the employer rents the assets?

Answer 12

higher of:

1) 20%*Market value
2) Rent paid by employer

Question 13

What is the taxable benefit of living expenses capped at?

Answer 13

10% of the employees net earnings (excluding living expenses)

Question 14

what are the rules for occupational remuneration arrangements?

Answer 14

Higher of:

1) The amount of cash pay given up
2) The taxable value under the normal benefits in kind rule

Question 15

What benefits are exempt from occupational remuneration arrangements? (5)

Answer 15

1) Pension savings
2) Employer provided pension advice
3) Childcare
4) Cycle to work (Cycle & safety equipment)
5) Ultra-low emission cars

Question 16

How are assets transferred to employees treated as a taxable benefit if the employer purchased the asset new?

Answer 16

Taxed at the cost to employer

Question 17

How are assets transferred to employees treated as a taxable benefit if the employee already has use of the asset?

Answer 17

Higher of:

1) Market value when gifted

2) Market value when first provided
LESS 20%*original value ever year used

*Remember to pro rata

Question 18

Is a parking space an exempt benefit for an employee?

Answer 18

Yes