Employment Income

Question 1

Employment Income Pro.

Answer 1

Salary/Bonus/Commission/Tips..
Benefits in Kind

Less

Expenses “wholly, exclusively and necessarily incurred”
Occupational pensions schemes
Contributions to a payroll giving scheme
Professional subscriptions.

Question 2

Allowable deductions

Answer 2

Take away allowable deductions from total taxable earnings to get met taxable earnings.

Allowable deductions cannot exceed total tax earning

Question 3

Expenses occurred by employees are deductible when…

Answer 3

Employee is obliged to pay the expense

The expense is wholly, exclusively and necessarily in the performance of the duties of the emp.

Professional subscription fees

Proportion of expenses if required to work from home.

Necessary tools, uniforms, protective clothing.

Question 4

Travel expenses deductions

Answer 4

Travel between work and home is not allowable

Can deduct travel and substinence between performance of their duties.

No normal place of work - then home to work is allowable. Eg client consultancy work.

If home is work locations.

Home to temporary workplace of no more than 24 months is allowed.

Question 5

Entertaining expenses

Answer 5

If it is reimbursed directly then you include it as The salary and then minus from the salary

If it is specific entertaining allowance then include it as income and then deduct it from the income.

General allowance
Include as salary

Question 6

Taxable Expenses

Answer 6

Professional subscription of 450 to CIOT

Allowable deduct full 450..

100 subscription to golf club for entertaining clients

No deduction not necessary for employ!!!

200 general round sum allowance of which 150 spent on entertaining

No deduction - full 200 will be spent on employee

250 for new suit - no deduction

100 specific spent on 80 Enter - 80 deduction

Question 7

Statutory Mileage Rate Scheme

Answer 7

Employees volunteers using car bike van for business travel..

The excess from the statutory rate is taxable

Are less than the state rate

Then it’s an allowable deduction!!!

Question 8

Statutory Mileage Rate

Answer 8

Car / Van 45p for first 10000 miles

25p after

Motorcycle 24p per mile

Cycle 20p per mile

Additional 5p per passenger

Question 9

Mileage Allowance

Answer 9

Mileage Allowance

Car 47p 14000 business miles

47 * 14000 is 6580

Take away 4500
25 per mil 1000

It’s always the amount reimbursed

Less the statutory allowance.

Question 10

Mileage allowance

Answer 10

If it’s positive it’s a taxable benefit it’s it’s negative it’s an allowable deduction.

Question 11

Employee Loans

Answer 11

This is calculate the taxable benefit when there are loans made to their employees which are below the official rate of interest.

Question 12

Employee loans - Average and strict method

Answer 12

Strict Method:

Amount of loan * number of months * 3%

Less

Interest Paid - amount of loan * no. of months * interest rate

Average method

The amount of the loan at the start of the year less the amount of the loan at the end of the year / 2 * 3%.

Question 13

What’s the difference between the average and the strict method

Answer 13

The strict method is more exact. They both subtract the interest actually paid but the strict method has a more precise method.

Question 14

Emoloyee loans - no taxable benefit when

Answer 14

The employee loan is less 10,000.

Loans made on normal commercial terms

Question 15

The assets transferred to employees

Answer 15

If an employer purchases a new asset and gives it to an employee immediately the employee is taxed on the cost of the asset.
When the employee has use of the asset and is then given the asset the benefit is the-
Higher of market value when gifted Market value when first provided.

Question 16

The assets transferred to employees

Answer 16

Market price when gifted
Market gift when first provided
Less benefit already taxed..

Question 17

The assets transferred to employees- car/van/bike

Answer 17

The benefit is current market value less employee cont.

Question 18

The assets transferred to employees - Q’s.

Answer 18

Market value when first provided
Less market value * 20% * pro rate if necessary.
Whe the employees has paid for anything subtrt.

Question 19

Taxable Benefits- Revision

Answer 19

Living accommodation-
If the ER rents the property the benefit in kind is valued at the higher of

Rent paid by the Employer/
Annual Value(told in the question).

Question 20

Taxable benefits-when the employee owns the propert.

Answer 20

The benefit in kind is the Annual Value of EXPENSIVE
Cost + capital expenses > 75,000

Charge-

Cost
Less 75,000

Excess
Excess * ORI

Market value if more than 6 years between move in date.

Question 21

Car benefit

Answer 21

Benefit =manufacturer’s list price

* CO2 emissions

Question 22

Car benefit - list price

Answer 22

Includes optional extras when originally bought

Deduct any capital contributions made 5k

Question 23

CO2 emissions %

Answer 23

95 grams 14%
Additional complete 5%

Round down to nearest 5g/km
3% supplement for diesel cars

Max-37%..

Question 24

CO2 Emissions

Answer 24

Lower rates for qualifying cars-.

Question 25

Cars-

employees.

Answer 25

Deduct for Employees private use

No car benefit for pool cars

Benefit covers the running costs of the car including insurance, maintenance and road tax.

Time apportion benefit for part availability

Unavailable periods

Question 26

Car Benefit- Fuel

Answer 26

Fuel benefit

Benefit = the CO2 emissions * 22100

Question 27

Car benefits- fuel

Answer 27

No deduction for employee partial contribution towards fuel.

If employee pays for the cost of the private fuel there isn’t taxblebenefit.

Question 28

Assets lent for PU.

Answer 28

Employer owns the asset-
Benefit - 20% * market value

Employer rents the asset
Benefit higher of 20% * MV
Rent paid by employer

Question 29

Childcare payments

Answer 29

Exemption available if employer contracts directly with or provides vouchers for an approved child carer.

Amount of exemption depends on when the employee joined the scheme.

Employee joined pre April 2011

Up to 55 week exempt

Employee joined on or after 6 April 2011

55 week exempt basic rate

Higher rate 28 week exempt

Additional rate 25 week.

Question 30

Living Expenses.

Answer 30

In addition employees taxed on living expenses

Heat and lighting
Cleaning
Repair
Decoration

Benefit is the cost to employer less the employee contribution

Furniture benefit is the use ofasset rules…

Question 31

Living expenses

Answer 31

Add back on the living expenses and the 20% of furniture.

If the total is more than 10 per cent of total taxable earnings- the lower of 10 per cent of total taxable earnings or the total expenses!

Question 32

Car expenses - Employee

Answer 32

No Private Use deductions for Employees unless the employee ACtuLLY pays for the private use.

Question 33

Client entertaining

Answer 33

Have to add on the entire amount of the round sum allowances for the client entetaining- not allowed round sum allowances!

Question 34

Travel to and from work-permanent workplaces

Answer 34

If it’s a permanent workplace it’s not deductible

Question 35

Taxable expenses - Property Income

Answer 35

Property income less expenses-mortgage interest and agent fees