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TC > Employment Income > Flashcards

Employment Income Flashcards

1
Q

Employment Income: Basis of assessment

A

Receipts basis

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2
Q

Employment income: Receipts basis

A

Earlier of:

  1. Actual payment date
  2. Date entitled to payment
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3
Q

Employment Income: Who has extra income-recognition rules?

A

Directors

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4
Q

Employment Income: Recognizing income: Directors: 3 extra rules

A
  1. Date earnings CR’ed
  2. Last day of POA
    If earnings determined before end of period
  3. Date earnings determined
    If determined after end of POA
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5
Q

Employment Income: Travel expenses: How long can an employee have a temporary workplace and have allowable travel expenses?

A

24m

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6
Q

Employment Income: Can entertaining expenses be deducted from a general/round sum allowance?

A

No

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7
Q

Employment Income: What happens if mileage payments from the employer: Exceed the statutory rate?

A

The excess is a taxable benefit

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8
Q

Employment Income: What happens if mileage payments from the employer: Are less than the statutory rate?

A

The shortfall is an allowable deduction

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9
Q

Employment Income: Living expenses benefit cap
(Furniture, bills etc.)

A

10% of net earnings

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10
Q

Employment Income: What happens if a loan is made to an employee below the official rate of interest?

A

Taxable benefit

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11
Q

Employment Income: Official rate of interest

A

2%

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12
Q

Employment Income: 2 methods of calculating below-interest-rate loans

A
  1. Average Method (default)
  2. Strict Method
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13
Q

Employment Income: Calculating below-interest-rate loans: Average Method

A

Average of loan outstanding at beginning and end of tax year, timesed by 2% interest

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14
Q

Employment Income: Calculating below-interest-rate loans: Average Method: What happens if the loan was taken out/redeemed during the tax year?

A

That balance is used instead of the balance outstanding at the beginning/end of the tax year

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15
Q

Employment Income: Calculating below-interest-rate loans: Strict Method

A

Calculate monthly benefit actually outstanding at the end of each month

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16
Q

Employment Income: Calculating below-interest-rate loans: When does the strict method apply?

A

If taxpayer elects to use it
(Otherwise the Average Method is used)

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17
Q

Employment Income: Calculating below-interest-rate loans: How is the actual assessable benefit calculated?

A

Loan amount (Strict/Average)
X
ORI
-
Interest actually paid
In the TY

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18
Q

Employment Income: Calculating below-interest-rate loans: What are the 2 times when there are no taxable benefits?

A
  1. The total loans (to the employee) in the TY
    Is less than 10k
  2. Loan made on normal commercial terms as a money-lending business
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19
Q

Employment Income: What happens when any amount of a loan to an employee is written off?

A

The amount written off is treated as a benefit so charged
(To IT and C1 NIC)
In full
At time of write-off

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20
Q

Employment Income: Benefit when employee has use of an asset and is then given the asset

A

The higher of:

  1. MV when gifted
  2. MV when first provided
    Less
    Benefit already taxed under private use rules
    (Less amount paid by employee)
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21
Q

Employment Income: Private use rules

A

20%
Of MV
Per annum
For as long as the asset has been lent

22
Q

Employment Income: Benefit when employee has use of an asset and is then given the asset: Exception

A

Car

Is always current MV
(Less employee payment)

23
Q

Employment Income: Optional Remuneration Arrangements aka:

A

Salary sacrafice

24
Q

Employment Income: Optional remuneration arrangements: Taxable value of benefit =

A

HIGHER of:

  1. Pay given up
  2. Taxable value under the normal benefit in kind rules
25
Q

Employment Income: Optional remuneration arrangements: What is the taxable amount treated as?

A

A benefit
(Usually reported via P11D)
(And subject to class 1A NIC)

26
Q

Employment Income: Optional remuneration arrangements: Are the benefits taxable even is usually exempt?

A

Yes

27
Q

Employment Income: Optional remuneration arrangements: Exempt benefits

A
  1. Pension savings
  2. Employer provided pension advice
  3. Childcare
  4. Cycle to work (+ safety aquipment)
  5. ULE cars (Up to 75g/km of CO2)
28
Q

Employment Income: Are trivial benefits (to ee’s) exempt?

A

Yes

29
Q

Employment Income: Trivial benefits definition

A

ALL of:

  1. Not over £50
  2. a. Not cash
  3. b. Not cash voucher
  4. Not recognition of services
30
Q

Employment Income: Trivial benefits: Thing to bear in mind

A

OBT cap (Of £300) to certain directors

31
Q

Employment Income: Taxable benefit: General rule:

A
  1. Taxable amount = Cost to employer
  2. Time apportion
  3. Deduct ee payment
32
Q

Employment Income: Taxable benefit: General rule: Benefit if provided in-house: Taxable amount =

A

Marginal cost
To the employer

Less contributions to the employee time apportioned for part availability

33
Q

Employment Income: Taxable benefits: Living accommodation: Is there a benefit if job-related?

A

No

34
Q

Employment Income: Taxable benefits: Accommodation: Employer owns the property

A

Rateable value (Given in exam)

PLUS

Expensive charge

35
Q

Employment Income: Taxable benefits: Accommodation: Expensive charge

A

Cost
MINUS
75k
X
ORI

36
Q

Employment Income: Taxable benefits: Accommodation: Expensive charge: Cost: Employer owned the property for more than 6y before the employee moved in

A

Market Value at date employee moved in

PLUS

Any capital improvements
SINCE employee moved in
BEFORE START OF TAX YEAR

37
Q

Employment Income: Taxable benefits: Assets lent for private use: Employer owns the asset
(Including living expenses e.g. furniture)

A

Annual Value

38
Q

Employment Income: Taxable benefits: Assets lent for private use: Annual Value calculation

A

MV when first provided
X
20%

39
Q

Employment Income: Taxable benefits: Assets lent for private use: Employer rents the asset

A

HIGHER OF
1. Annual Value
2. Rent paid by employer

40
Q

Employment Income: Taxable benefits: Assets lent for private use: What happens if they are shared by other employees?

A

Apportioned

(Just and reasonable)

41
Q

Employment Income: Taxable benefits: Car benefit

A

Manufacturers list price
X
CO2 emissions %

42
Q

Employment Income: Taxable benefits: Car benefit: Manufacturers list price: Do you include optional extras when originally bought?

A

Yes

43
Q

Employment Income: Taxable benefits: Car benefit: List price: What to do with capital contributions by the employee?

A

Deduct them

UP TO A MAXIMUM OF
5k

44
Q

Employment Income: Taxable benefits: Car benefit: List price: Is there a maximum list price?

A

No

45
Q

Employment Income: Taxable benefits: Car benefit: Pool car benefit

A

None

46
Q

Employment Income: Taxable benefits: Car benefit: Is it time apportioned?

A

Yes

BUT

Not for unavailable periods less than 30d
(E.g. repairs)

47
Q

Employment Income: Taxable benefits: Fuel benefit: Deduction for partial contribution made by employee towards private fuel

A

NONE

48
Q

Employment Income: Taxable benefits: Fuel benefit: Deduction for full contribution made by employee towards private fuel

A

Full

49
Q

Employment Income: Taxable benefits: Fuel benefit: Time apportionment

A

The same was as car benefit

50
Q

Employment Income: Taxable benefits: Fuel benefit: What to do if private fuel is not available for part of a tax year?
E.g. employee opts out of a scheme

A

Time apportioned

51
Q

Employment Income: Taxable benefits: Fuel benefit: What to do if private fuel is not available for part of a tax year, and becomes available later in the same tax year?
E.g. employee opts out of a scheme

A

NO TIME APPORTIONMENT

TC (8 decks)

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