employment income Flashcards
who is an employed person
have a contract of services
earnings recorded in income tax
who is a self employed person
have a contract for services
earning are recorded in trading income
what are the Conditions to consideration while determining employment or self employment:
- Obligation: Either obligation to follow everything directed by Employer
- Control: Controllability by Employer
- Fixed Hours: Number of Fixed working hours
- Integration: Work performed, integral part of Business
- Risk: Financial risk arising from not being paid an agreed, regular, remuneration & Risk and
rewards provided on equipment provided by employer - Equipment: Use of Equipment can be a useful factor
- Rights: Right to receive sick pay, benefits etc
- Source of work: How many sources of Income does the individual have
how should we distinguish what is an allowed expense? and what’s the pneumonic?
- if it is necessary, exclusively, and wholly for a business
-NEW
when is bonus / salary recorded on the tax statement
earliest of :
-entitlement date or
-receipt date
however
If after Entitlement date, salary is not received within 9 months then Entitlement date is effectively ignored
what traveling expenses are considered allowable
- Office to Client or Vice versa
- Office to Temporary workplace (site based) or Vice versa
- Home to Temporary workplace (Seconded) or Vice versa
what is a temporary work place
Business Purpose Travelling
Temporary workplace is a place where employee does not work more than 24 months
what traveling expenses are treated as disallowable
Private Purpose Travelling (Non-Deductible):
* Home to office or vice versa
* Home to holiday or vice versa
* Office to holiday or vice versa
what are other business related deductible expenses
- Professional subscriptions
- Employee occupation pension scheme contribution
- Payroll deduction/ gift as you earn (Gaye)
- Other deductible expense
what is approved mileage allowance
- If an Employee uses his own car for employer’s work than employer compensates for the mileage travelled
what is the statutory limit
o 1st 10,000 Miles 45p/mile
o In excess of 10,000 miles 25p/mile
when are benefits taxable
Benefit is Taxable if:
* It arises “by reason of employment”
* Provided to Employee or his member of family
* Paid by employer or third party
* and is not NEW neccesarily exclusivel and wholly used for employment
how to calculate expensive accommodation benefit
(Cost – 75,000) X Official Rate of Interest (2.25%)
what are the types of benefits
- Exempt Benefits (Provided against facilities for business purpose)
- Taxable Benefits (Provided against facilities for private purpose)
taxable benefit for job related accommodation
exempt
how do you calculate car benefit
(list price-capital cont/component by ee(5k)) x tax rate(CO2)- running expense cont by ee
look at tax table
how much is the maximum amount of capital contribution
5000
how to calc fuel benefit
27800 *CO2 rate
what is the benefit if Accommodation is rented by employer
Higher off:
* Annual Rental Value
* Rent actually paid by Employe
what is the benefit if Accommodation is owned by Employer
Rental benefit = Annual Value.
* If accommodation cost is more than £75,000
* Expensive Accommodation Benefit
* (Cost – 75,000) X Official Rate of Interest
(2.25%)
how to calculate non job related accommodation benefit
PICK THE HIGHER OF:
annual property value
or
rent paid ebb employe\
+
EXPENSIVE HOUSE(IF THE COST OF PURCHASE IS MORE THAN 75K):
(cost/mv+ capital improvement up to prior year -75k) x 2.25%(ORI)
-employee contribution
when is market value used instead of cost
when the date of purchase to the date of provision of the house is more than 6 years
what do you do to the formula is the time is not a year exact
you must time apportion
how to calculate the job related utilities benefit
you pick the LOWER OF : cost paid by employer
or the
10% of employee net earnings ( excluding accommodation benefit )
