Taxation (TX)

Question 1

(QUESTION BANK)
Fran who was a resident in the UK for the 2 tax years prior to the tax year 2023/24, was in the UK for 18 years in the tax year 2023/24.

Identify if Fren is automatically not resident in the UK.

Answer 1

Fren is automatically not resident in the UK.

Question 2

(QUESTION BANK)
National Insurance is a direct tax suffered by employees, employers and the self employed on earnings.

State wether this statement is true or false regarding direct taxes.

Answer 2

TRUE

Question 3

(QUESTION BANK)
State whether the following items of expenditure are deductible in the calculation of individual taxable income.

(1) A contribution into a personal pension scheme
(2) A charitable gift aid donation
(3) A contribution into an employer’s occupational pension scheme
(4) A charitable donation made under the payroll deduction scheme

Answer 3

(1) A contribution into a personal pension scheme- NOT DEDUCTIBLE

(2) A charitable gift aid donation- NOT DEDUCTIBLE

(3) A contribution into an employer’s occupational pension scheme- DEDUCTIBLE

(4) A charitable donation made under the payroll deduction scheme- DEDUCTIBLE

Question 4

(QUESTION BANK)
Interest paid on a loan Ifram incurred to purchase a laptop for use in his employment.

Identify wether Ifram’s interest payments represent a qualifying interest and is deductible from his total income or is not qualifying.

Answer 4

Qualifying interest.

Question 5

(QUESTION BANK)
Haniful has taken goods from his business for personal use. The goods cost $850 and have a selling price of $1,100. Ha has made no entry in his business accounts in respect of the goods except to record their original purchase by the business.
Haniful’s trading profits prior to any adjustment required for the goods taken for own use were $247,500

What is Haniful’s tax adjusted trading profit after making any necessary adjustments in respect of the goods taken for personal use?

Answer 5

$248,600

Question 6

(QUESTION BANK)
Olive is self employed, Preparing her accounts to 5 April each year. She claims capital allowance on a car used in her business. The car has a CO2 emission rate of 65g/km, with 40% of Olive’s mileage for private purposes.
The car has a TWDV of $12,000, at 6 April 2023. Olive sold the car for $6,000 on 1 November.

What amount of capital allowance can olive claim in respect of the car for the tax year 2023/24?

Answer 6

$3600

Question 7

(QUESTION BANK)
Which 2 of the following assets bought by a sole trader will be allocated to the main pool for capital allowance purposes?

(A) Delivery van costing $12,500 with 25% private by the business owner
(B) Laptop computer costing $4,500 with 15% private use by the owner of the business
(C) Car with CO2 emissions of 45g/km costing $17,500 with 25% private use by the employee of the business
(D) Car with CO2 emissions of 75g/km costing $16,500 used solely for business purposes by the owner of the business
(E) Factory air- conditioning system costing $110,000 with a 27 year expected life
(F) Packing machine costing $105,000 and with a 24 year expected life

Answer 7

(C) Car with CO2 emissions of 45g/km costing $17,500 with 25% private use by the employee of the business

(F) Packing machine costing $105,000 and with a 24 year expected life

Question 8

(QUESTION BANK)
Dong is employed. As well as his annual salary he is also paid a bonus in April each year. The amount of the bonus is based upon his performance to the end of the previous calendar year.
Identify the treatment of the following bonus to be “taxable in tax year
2023/24” or “not taxable in tax
year 2023/24”.

> Bonus of £2,800 received on 6 April 2023 in respect of the year to 31 December 2022.

Answer 8

Taxable in tax year
2023/24

Question 9

(QUESTION BANK)
On 6 June 2023 Albert, a marketing manager, was reimbursed £500 by his employer, Generous Ltd, in respect of subscription fees he had paid to The Chartered Institute of
Marketing, and £200 in respect of train fares incurred travelling to meetings.
Which TWO of the following statements concerning the tax treatment of the reimbursed expenses are correct?

(A) The reimbursed subscription fees must be added to taxable pay and taxed through the
PAYE system
(B) The reimbursed travel expenses must be added to taxable pay and taxed through the
PAYE system
(C) The reimbursement of the subscription fees is exempt income, so no action is required
for tax purposes
(D) The reimbursement of the travel expenses is exempt income, so no action is required
for tax purposes
(E) Albert must include the reimbursed subscription fees on his tax return
(F) Albert must include the reimbursed travel expenses on his tax return

Answer 9

(C) The reimbursement of the subscription fees is exempt income, so no action is required
for tax purposes

(D) The reimbursement of the travel expenses is exempt income, so no action is required for tax purposes

=> If employee expenses are reimbursed by the employer, the amount received is taxable. An
exemption applies if the employee could claim a tax deduction for business expenses. The
reimbursement of Albert’s professional subscription fees and train fares are exempt.

Question 10

(QUESTION BANK)
Elin is provided with accommodation by her employer, which the employer purchased
35 years ago at a cost of £72,000. The property has an annual value of £2,600, and had a
market value of £245,000 when first made available to Elin 8 years ago. Elin pays £250 per
month to her employer to live in the property.
The accommodation does not qualify as job-related.
What is the assessable benefit for Elin in the tax year 2023/24?

Answer 10

£0

=> The original cost did not exceed £75,000, so the only benefit is the basic charge based on the
annual value of £2,600. As Elin contributes more than the annual value (£250 × 12 = £3,000),
the taxable benefit is £0.

Question 11

(QUESTION BANK)
Thiago is provided with a new diesel company car on 6 May 2023, which he used for both
business and private purposes during the tax year 2023/24. The car has a list price of £28,000
and CO2 emissions of 157 grams per kilometre. The car meets the RDE2 standard.
What is Thiago’s car benefit for the tax year 2023/24?

Answer 11

£9,240

=> CO 2 emissions = 157 grams per kilometre (rounded down to 155), available for 11 months.

Diesel (meets RDE2 standard so no additional 4%) 16
Plus: (155 − 55) × 1
/ 5 20
–––
Appropriate percentage 36
–––
Car benefit (£28,000 × 36% × 11/12) = £9,240

Question 12

(QUESTION BANK)
Woojin is provided with a loan, on which he pays interest at 1% per annum, by his employer.
The loan was £100,000 when it was taken out on 6 April 2023 and he repaid £40,000 of the
loan on 6 August 2023.
What is Woojin’s beneficial loan benefit for the tax year 2023/24 assuming the average
method of calculation is used?

Answer 12

£1,067

=> Average method
Loan at start of tax year 100,000
Loan at end of tax year 60,000
–––––––
160,000
–––––––
Average loan (£160,000 ÷ 2)/Benefit (£80,000 × 2.25%) 80,000 1,800
–––––––
Less Interest paid
(£100,000 × 1% × 4/12) 333
(£60,000 × 1% × 8/12) 400 (733)
––––––– ––––––
1,067
––––––

Question 13

(BPP)
Fareplc wishes to appeal against the assessment of £10,000,000of corporation tax by HMRevenue&Customs(HMRC).
By whom is Fareplc’s appeal most likely to be heard?
(a) By the First Tier Tribunal
(b) By the Upper Tribunal
(c) By the Supreme Court
(d) By the Court of Appeal

Answer 13

(b) By the Upper Tribunal