Employment Income Flashcards
What three types of income constitute employment income?
- Salaries & Bonuses
- Benefits
- Pensions
What is the standard Proforma for Employment income?
Salary
Bonus
Benefits
Less Allowable Deductions (incl. pens.)
Employment Income
At what point do we recognise when bonus income is received?
The earlier of date of entitlement and date of receipt.
Name 7 types of allowable deductions for employment income?
- Registered occupational pension scheme contributions.
- Professional body subscriptions (i.e. ACCA)
- Approved mileage deductions
- Payment to charity under payroll deduction scheme
- Qualifying travel expenses
- Capital allowances on P&M for necessary performance of duties.
- Any expenses incurred wholly, exclusively and necessarily in the performance of duties.
What are the two main rules when calculating company benefits?
- Pro rate for part availability
2. Deduct any employee contributions to the benefit
If accommodation is provided that is job related what is the taxable benefit?
Nil
If accommodation is provided that is not job related, what is the taxable benefit?
Greater of
- Annual Value
- Rent Paid by Employer
additional charge if cost > £75,000
official rate of interest * (cost - 75,000)
If living expenses are job related, what is the taxable benefit?
Cost of providing but limited to 10% of net earnings.
If living expenses are not job related, what is the taxable benefit?
Cost of providing only
If use of employers assets are available, what is the taxable benefit?
Higher of:
- 20% of original value
- Rental cost
If assets are given to the employee brand new, what is the taxable benefit?
Cost
If assets are given to the employee but are used, what is the taxable benefit?
Greater of:
- MV when given
- MV on acquisition date less benefit assessed in respect of use.
How is the taxable benefit of beneficial loans calculated?
Interest at the official rate
Upto how much can a beneficial loan be for it to be exempt?
Upto £10,000
If medical insurance is provided by an employer, what is the taxable benefit?
Cost of providing.
If fuel for private motoring is provided, how is the taxable benefit calculated?
£22,600 * % used to calculate car benefit
If a company van is provided by an employer, what is the taxable benefit?
£3,230
+ £610 charge for any private fuel.
To which scenario are Personal Service Companies applicable? i) Sole Trader ii) Where a Company is formed
Where a company is formed
To when does the Personal Service Company (IR 35) anti-avoidance legislation apply?
When an individual sets up a company to offer their services rather than be employed.
What is a ‘deemed salary’?
Deemed salary is calculated where an individual would have been employed but for their intermediaries.
True or False: Deemed salary is from relevant engagements - not actual salary.
True
