Osborne W/B - things I got wrong, wasn't sure of

Question 1

1.2

When an accountant is advising a client where is greatest duty of care?

HMRC, Client, public interest

Answer 1

Client

Question 2

1.1

‘equity’ meaning

Answer 2

Fairness

Question 3

are premium bond prizes exempt from tax

Answer 3

yes

Question 4

2.3

What about legal fees relating to property?

Answer 4

Relating to purchase of property?
Not allowable (NB. Q relates to Income tax not CGt)

Relating to tenancy agreement?
Allowable

Question 5

Is Council tax between tenancies allowable expense?

Answer 5

yes

as is insurance

Question 6

3.5

age for cash isa 16 or 18?

Answer 6

16

18 for S&S ISA

16 for premium bonds (don’t think mentioned in PTAX)
Prob 16 ‘coz no risk to capital (except inflation erosion!)

Question 7

4.3

Working out accommodation

Answer 7

Annual value
add on any ‘expensive accom’ bit (excess £75K*2.25%)
deduct anything paid
time apportion

Question 8

4.4

working out loan benefit

Answer 8

• Take owed at BOY + EOY / 2
• Multiply by fraction of year (ie months ANY amt owing)
• Multiply by 2.25% (adj %age if paying something)

Question 9

4.5

tell about pension contribs handling

Answer 9

ignore employer contribs

1. employee contribs to company scheme:
   - Lower taxable salary by net amount
2. employee contribution to Personal pension
   - Gross up contrib and extend basic rate band

Question 10

5.4

car
list price i know… but what if there was a ‘discount’

Answer 10

ignore…. just another way of giving ‘cost’ price and list price!!!

use LIST price

Question 11

6.1

CGT on gift to friend - what ‘proceeds’ to use?
actual, deemed @ mv, no gain or loss

Answer 11

Deemed @ mv

Because its a GIFT it’s ALWAYS ‘deemed’ @ mv

whether friend or connected person

Question 12

P1T3

Calculating BIK for a flat provided annual value 5k, purchased 130K , worth 200K when first occupied by employee..

Answer 12

5k plus

Use the value when first occupied by the employee NOT the purchase price to calculate the extra charge (x2.25%)

Question 13

P1T7

Calculating Class 1 NICs for employee

Answer 13

i got the bit between 9,500 - 50,000 right

but then I did total salary minus that part to get the upper band amount which is wrong.

The upper band is the amount of salary above 50K … if do the way I did you end up with an extra 9,500 @ 2%

If unsure draw a line for the tatal salary and section it at 9,500 and 50,000 to be clear about how to get right amount in each band.
OR Do the calc like you would incme tax.. show the 9.5K @ 0% and work up (using gross salary) … then check the total equals the total salary (no NIC on BIK)

Question 14

P2T6

Income tax computation.
What to remember about altering the band due to Gift aid/ PP pmts?

Answer 14

Remember the Savings and Div allowance ‘use’ up the bad … when working out amounts need to carefully work out where the band falls..

… several times I get it wrong by miscalculating how much band has been used due to not including allowaance

Question 15

p3t2

enhancement to car partway through year

Answer 15

just add to the list price (if the amount is over the threshold) … do not apportion

Question 16

p3 t5

use of property allowance £1K where the property was used personally for some of the year?

Answer 16

seems to be allowed…