Employment Income - Lecture 3

Question 1

If individual regarded as employed..

Answer 1

Assessable to tax on employment income

Question 2

If individual regarded as self-employed..

Answer 2

Assessable to tax on trading income

Question 3

Benefits assessable can be taxed two ways

Answer 3

1) Adjustment to employee’s tax code for tax calculation purposes
2) Adding taxable value benefit to salary for employee and taxing via PAYE

Question 4

Assessable benefits - benefit valuation =

Answer 4

Marginal costs to employer providing benefit

Question 5

If employee pays employer for benefit

Answer 5

Assessable amount calculated as normal and reduced by employees’ contribution (max £5000)

Question 6

Car benefit =

Answer 6

List price (when new) x CO2 %

Question 7

CO2 emissions rounded

Answer 7

Down to nearest 5g/km

Question 8

No additional ‘running cost’ benefit unless (2)

Answer 8

• Chauffeur provided (benefit = cost to company)

- Private fuel paid by company

Question 9

Fuel benefit =

Answer 9

£22,600 x CO2 % x time used

Question 10

Contributions towards fuel benefit by employee

Answer 10

No deduction

Question 11

Beneficial loan

Answer 11

Interest free/ low interest loan made to employee by employer

Question 12

Capital amount > average method

Answer 12

((Opening balance + Closing balance) / 2) x ORIT

Question 13

Capital amount > alternative (precise) method

Answer 13

Actual capital x ORIT x n/12

Question 14

If total amount doesn’t exceed £10,000 (beneficial loan)

Answer 14

No assessable benefit

Question 15

Beneficial loan > exceeds £10,000

Answer 15

Full loan chargeable, not just excess over £10,000

Question 16

Use/ gift assets =

Answer 16

20% x open market value when made available

Question 17

Gift of asset when new, benefit valuation =

Answer 17

Cost to company

Question 18

Use of asset followed by gift, benefit valuation higher of

Answer 18

• Market value at date gift less amounts paid by employee

- Cost to employer less benefits assessed to date and amounts paid by employee

Question 19

Accommodation if job related

Answer 19

Exempt

Question 20

Accommodation if non-job related, benefit valuation =

Answer 20

Basic charge + Further charge + Accommodation living expenses + Use of furniture

Question 21

Basic charge > accommodation

Answer 21

Higher of annual value/ rent paid by employer

Question 22

Further charge > accommodation if property > £75,000

Answer 22

(Cost / valuation [6 year rule] - £75,000) x ORIT

Question 23

Motorbike expenses

Answer 23

24p per mile regardless mileage

Question 24

Bicycles expenses

Answer 24

20p per mile regardless mileage

Question 25

Class 1 Primary

Answer 25

Paid by employee > based cash remunerations

Question 26

Class 1 Secondary

Answer 26

Paid by employer > based cash remunerations of employee

Question 27

Class 1a

Answer 27

Paid by employer > based on employment non-cash benefit valuations