EMPLOYMENT INCOME

Advance Taxation
Tutor : Owais MirchaWala

Employment Income
 Income class I (A)
Employment
3,
Employer Class 1 Er
NK Nic

It
payable by Employer
59.000
It includes taxation issues amounts is Cash
Benefit
=

Salary =
-
- -

on

It applies cash 8840

by Employees due to their Employment benefits given
earned .
-

on all Non -
✗ 01. = 0

Employment to 50,160 13.81

Income tax G income
employee
✗
692£
-

1 NIC
.

on <
,

Termination 59.000
2
,
Payments 1
,
car -6922
3, Share Based Remuneration 2
,
Fuel

Accommodation class
4, Basic
Employment income .
3) I (A) Ernie

benefits
4600
Benefit
-
Non cash -
Car =

Fuel
Income tax G NK on
Employment income
Benefit
= 2100

taxed 6700
Employment income is as Non
saving
-

income in income tax return .

-
Class 1 A Er Nic = 6700 ✗
13.81=92--5
- - - - -
- - - -

E income tax
Employment income following Nlcs payable
.

On - --- -

are
-
.

class 1 Income tax

I,
Employee Nic

It is 59,000
payable by employee salary NI
-
-
=
-
>

It applies all cash

benefits
Car
Benefit 4.600
Employment 65,700
= -
-
on -

Fuel PA (12,570)
Benefit 2,100
-

-
:
✓

65,700 Taxable
-

salary -
Cash Allowances
Employment income 53,130
-
Bonus Ta±
- 37.700 × 201 =
7540
-

15.430
-

- -
-
✗ 401.
=
6172

53,130 13.712

class 1
2
,
Employer NK

It
by Employer class
Employee
NK
is
payable 1
-

It
benefits given Benefits
cash 59.000
applies on all Cash
Salary
- = =
-

to
employee
.

9568 ✗ Of =
0

40,702 ✗
12% =
4884
- -
I
T
-
=
.
50,270

✓
8730 ✗ 21 .
=
175

total class 59.000

On 1
Employer Nic payable 5059
-
.

by employer for employees HMRC

all allows
,

deductible
of £4.000
allowance is .

For it
-

Employment allowance is
necessary
that has than
employer more one
employee
.
 - - -
- - -

- -
- - . ____
- - - -
-
- - - - - - → - - - -

a - -

Income Tax Nls

Salary 40.000
Employment 74,500
Salary 27,000
-
-
-
=

Bonus PA 42,570) Termination 65.000

payment
-
= 12,000 - -
=

( 17,000)
Taxable 61,930 Termination
Payments Statutory payment
7200 >
car
Benefit
-

=
- =
-

fuel 4100 Termination Notice period payment (2%000) > 20.000

Benefit Tax
payments include amount
paid to
employee
- = =
-
-

Accommodation 28.000
Exgratia
11,200 7540 termination
from
37,700 20-1 his
job
=
- -
✗ . =
on .

74.500 241230
Employment
×
401=9692 From tax these termination Exemption limit 30.000
perspective payments
-
- -
:
-
are
,

61.930 17.232 divided in 3 heads .

-

statutory amount 47.000)

amounts 23,000>(23-000)
statutory Amounts These
1, : are the which

to due to 5000 > 5000

Class 1 Ee NK are
given employee a
legal 52.000
Salary = 40.000 > 9568 ✗ 01 0
requirement Employment income
-
= .

Redundancy
40.702
Payment
Bonus 4884
Eg Statutory
✗
-
= 12.000 12-1 .
=
.
-

52.000 Nts
50,270
Statutory Disability Payment
-

1730 2-1 These amounts tax

Employment
✗ 35 52.000
exempt
from
.
= -
are income > 37.700 ✗ 201
. =
7540

52,000 4919 . & NIC . PA ( 12,570 ) 1730 ✗ 40% =

692

39.430
Payments
contractual These Taxable 39.430 8232
2
,
: include
payments
Class 1 Er NIC which are made due to contract between

40.000
salary =
> 8840×01 0
Employer &
Employee
-

. =
.

Bonus 43,160 13.81=5956

12,000
Eff Notice Period payment
-
=
✗ .
-

52.000 52,000 5956 These taxable tax

for
income
wholly
-

are

4 NIC .

These
Exgratia
amounts
Class I (A) Er Nic 3,
Payment : are paid by
7200 discretion
car
Benefit Employer on his
=
-
own .

Fuel 4100 These amounts £30.000

Benefit 322,500
13.81--310--5 exempt up till
=
are
-

✗
-
.
-

Accommodation 11,200 Excess will be

chargeable
-
= .

22,500 -

Exemption limit of €30.000 is reduced

by amount
of wholly exempt ( statutory amounts .
 Share Based Remuneration ---¥
=↳cashBeTgit-→②
-
→

⇐ -=-_€-
- -

-
- -
-

This
topic tax
- includes
implications of
share -
-
a -

to of
Salary 12.000 based Remunerations
given
an
employee MU shares 6-5×8.000 = 52.000
. -

Termination Payment 87.000 Share based remunerations divided Amount

paid by 4×8000 (32.002
Employee
= -
are in -
-_ :

:(34.0005
Redundancy Payment (23-000)
>
tax 20.000
Employment Benefit
-
Statutory two heads
from perspective
-

-
:

Payment
Period > 23.000
Notice 1, share incentives shares Tax Share Incentive 1270 ✗ 20-1 254
Transfer of
-
=
on : .

18,730
C-
gratia
30.000
options 40-1 7492
×
2) Share
=
✗ .

/ 7746
Share incentives
Transfer of shares 20.000
-

Exemption limit = 30.000

amount:(34¥ In band
statutory this situation
Employer gives shares to Basic Rate 37.700
-
-
-
=

0 >
( )
Employee immediately Existing salary
49.000
É
-

- -_
.

30.000 > 30000

-
Share incentive means
transfer of shares to PA (12,5-70) 1
immediately Taxable
salary 36.430>136.430)
employee
.

Employment 65.000 mu shares

g
-
✗✗✗

Amount paid (Xxx ) Remaining BRB 1270

by Employee
-

Employment benefit
Nls ✗ ✗✗

Quoted
tax Shares
therefore they
>
this
Employment benefit Es
65.000 37.700×20-1=7540 On NK NK >
Employment income are will be
' " 730
( 12.5703 40%
treated G
Benefit
PA ✗ 5892
be cash Class I Ee
=

will
payable
as
'
.

Taxable 52,430 52,430

Employment
13,432 income NIC G Class 1 Er
payable
-

Nic will be .

0-9568
Non
saving income class 1 Ee NK 01
- =

9568-50,270 =
121
.

Benefit
cash 20.000
50,271
:
✗ 2%
-
-
=
-

IF Existing salary of starting

shares are
quoted then Nic is
payable 49,000 will use
-
-

as a cash
benefit portions of
Band .

> Class 1 Ee Nic

-

9568 band is used

class 1 Eg Nlc -

50,270 band has (50,270-49.000)--1270

IF shares are
unquoted then is
payable
-

Nic
,

12-1 152
benefit
as a Non cash > 1270 ✗ . =

> Class / (A) 18.730 ✗ 21 375

Er Nic .
.
=

20.000 527

Class 1 Er NK

Existing salary of
49.000 will use
starting
-

band of 8,840 .

= 20.000 ✗ 13.8% = 2760

-
 - I - __

options
O→m°É__
- -f @

-② ③
- - o - -

_← salary
- -

Share
.
- -

②
- - __
.

=
58.000
f-

options
-

Share that will

employer
- -

shares (12,57-0)
give
-
mean -
- -
PA -

__#-←
✓
45.430
shares 6.000 60.000 to date Taxable
employee
MU
futureshare
10
Of
=
✗ on
-

= .

✓
Amount
paid by Employee 6000×8.5=(5-1.000) From tax
perspective options divided €-0 BRB : 37,700
-

are
- -

=
a -

9000
Employment Benefit
-

two
- - -

-
in heads
-
Income tax on share Incentive -_ 2270×201=454 Approved share option plan Approved share
option plan
6730×40%26-92 Unapproved share
option plan 1
,
Grant date = No tax will be
charged
9000 3146
=
-
IF share
option plan is
approved share option 2
,
Exercise date = No tax will be
charged
Basic Rate band 37,700 then its taxation date
=

plan will be : 3
Disposal Capital gains
tax will be
charged
-

=
, .

i
-

Existing salary = 48.000 ,

1
☒ On
grant date No tax will be charged DP = 4000 ✗ 9 =
36.000
(12.57-0) charged 4000×(1.51-025) (7-000)
,

PA
* 2, On Exercise date No tax will be cost :

Taxable salary 35.430 > £5,433 3> On Disposal date CGT will be
charged .

Chargeable gain 29,000

Annual Exemption ( 12,300)

2270
IF share Taxable 16.700
-

option plan is
unapproved share
option gain
then its taxation be : CGT= 16.700×201
334--0
-

plan will - =

NI → As shares are
unquoted therefore they ☒ on
grant date No tax will be charged
will be treated as Non cash
benefit 2, On Exercise date Employment benefit will be Unapproved share
option plan
and
¥
Class I (A) Er NK will be assesed 1
,
Grant date : No tax will be
charged
date
payable
.
-
Mv on Exercise date xxx 2) Exercise =
Employment benefit will be assessed.

(×××)
-
Amount paid by Employee
Eon [
Employment benefit
9000
-
Class I (A) Er NIC = ✗
13-81=12-21 .
✗ ✗✗ MU Exercise date -_ 4,000 ✗ = 12.000

-
Income tax E. NIC will be less : Amount paid : 4.000×(1.5+0.25)=17000)
5000
payable
on
Employment benefit .

Employment benefit
-
Income tax = 5000 ✗ 401 .
= 2000 ✓

3> On Disposal date CGT will be

charged .
-

NI → share are
quoted :
• it will be treated
as a cash
benefit
.

Class 1 Ee NIC : 5000 ✗ 2% = 100 ✓

Approved Unapproved Class 1 Er Nic 5000×13.81=690 ✓

-
=

Grant date 0 date CGT will be assessed

1
,
2000
0 3) Disposal = .

2) Exercise date 0 100

ego DP = 4,000 × 9 = 36,000

3) Disposal date 3340 2340 MU on Exercise date (12,000 ) → 4000×3

3340 5130 24.000

= =
Chargeable gain
Annual
Exemption 42.3¥
Taxable 11,700
gain
CGT = 11,700 ✗ 201 = 2340 .
 -

- -

=
- -0=-0
Incentive
.

salary
=
45.000 Approved Share
Option plans Enterprise Management
Plan

✓§ Éa±?¥
-
-

-
Four share
option plans are
approved by HMRC .
1
,
This share
option plan
is
flexible
&
Employer
⑤ BR -13=37.700 ( )
option plan
CSOP

company share
-

1,
-

include
employees his
-

of
can own choice in

Remaining
-

-
BRB
Enterprise
- -

Management incentive
plan CEMD this However those
- -

2 must
employees
be
↳ 37,700-32,430 =
,
plan .

Approved option save Earn ( SAYE ) time than

plan full G
share 3, less 30% shares
plan 5270 as workers
you
own
←

4) Share Incentive ( SIP)

1, Grant date = No tax will be
charged plan in
company .

2
, Exercise date : No tax will be
charged .

Company share
option plan CCSOP) 2
,
Exercise period of
the plan should be 0

This to 10
3,
Disposal date = CGT
=
will be
charged . I
,
share
option plan
is
flexible
E.
Employer years
.

include that be
can
employees of his own choice in 3
, maximum value
of
shares can

£000 this However those must included £250.000 worth

employees
DP 65,000 be
= ✗ 13 =

plan . in this plan are

(2-0.000) time than

less
full G
grant
cost : 5000×4 = workers own less 30% shares shares valued at Mv on date .

However

ifwill any employee already

45,000 CSOP limit
chargeable gain in
company .
owns then

Annual Exemption (12B¥ Exercise period the plan should reduce that value
by
2 be 3
of
.

Taxable 32,700 to 10 Exercise should be to

gain years
. 4,
price equal mv on

CGT that
grant date IF Exercise
527 less
5270 3 maximum value shares be price is than
of
= ✗ =
can
,
.

27430
-548L included date
difference
grant that
✗ 20% £30,000 worth then will
in this plan
=
are Mv on
,

32,700 -61-03 be considered

Employment benefit
grant
.

shares valued at Mv on date .

as
,
on

tax
Unapproved should to Es
Exercise NK Exercise
option payable
share be which will be
plan 4,
price equal mu on on

charged grant date IF Exercise date

less
1
, Grant date = No tax will be .

price is than .

2
,
Exercise date .

Employment benefit will be Mv on

grant date
,
then
difference
that will 5) As EMI is an
approved share
option plan
therefore running plan
cost
assesed
of
considered
be as
Employment benefit on will be an
.

a ,

tax allowed
-
Mv on Exercise date : 5000×7=35.000 ✓ which G NK will be
payable on Exercise expense for employer
.

Less Amount paid :

5000 ✗ 4 =
G° date .

15.000
Employment Benefit 5) As CSOP
approved share Em available to those
-
is
option plan plan is
only employers
-

an

tax
Income : 5270×201=1054
therefore cost
of running plan
will be an which
satisfy following conditions :
-

9730
401=38-92 allowed
Employer should than
✗
expense have less 250
for employer
.
b

15.000
49¥ employees
Its assets should be less than
shares
unquoted it will 2,
gross
:
-

II → are .
be

treated £-30m
benefit
as Non cash

should
Class I (A) Er NIC 15,000×1381=2070 3)
Company not be a
subsidaoy
- -
- -

3, date CGT will be assesed another co

Disposal of
.
= .

DP 5000 On Emi shares condition 5% ownership

of
: ✗ 13 =
65.000
-
is

(35-000) Business
Relief
Exercise date Asset
MV on waived
for Disposal .

30.000 17,700×201--3540
Chargeable gain >
=

AE (12,300)
Taxable Gain 17,700
 PAGE 195

e-

:-# E- =
-

-
-
-

f-

-
-
- - - -

-0--00
- e - -
- -
_o_ -
-

-- - ←

-5--5--0--70
PAGE 196

÷
 limited
Methley
(E) -
IF Simon will take shares
free
as a

then
award
of
shares
, Employment benefit will
Simon to
given
arise on when shares are
,

him on June 2022 .

Employment benefit will be

g MU shares £25,000
of
- =

paid Simon ( to )
Amount
by
-

£25.000
Employment benefit
-

Income tax = £25.000 ✗ 40^1 .

=
10.000

disposal shares December

in
On 2028
of
-

CGT will be
payable
.

Disposal Proceed xxx

-
Mv
grant of
on shares (1--25.000)
chargeable gain
✗ ✗✗

Annual
Exemption (12,307
Taxable
gain
✗✗ ✗

CGT ✗ ✗✗ ✗ 20%
1¥
-
= =

In options under
of grant of
-
case share

tax
advantaged company share option plan ,

tax
implications will be

date tax
On
grant June
1 2022
of
no
, ,

will be
charged
2 On exercise date October 2026
of
, ,
no

tax will be
charged
3 On
disposal date
of
December 2028
,

CGT will be
payable
.

Disposal Proceed xxx

cost -
Exercise price G

chargeable gain
✗ ✗✗

Annual
Exemption (12,3¥
Taxable
gainbe
xxx

taxable
payable
CGT
gain
-
will on

at rate 20%
of .
 PAGE 143

-=÷=== .

E :S
-

-
-
-
- -

>
-⇐ -_- ____ →

③
- -

Migrant
- - - -

26
-
-
-

-③→②_#•
-_

Exercise -
-0 -
- -
- -

=-D - - ②
-

-
-
-

E- ⇐#- -

-0
 Rod
(a) Sale tumba shares
of plc
Disposal Proceed 20.000 shares ✗ £4 = 80,005
Cost Exercise f- 23 :(46¥
:

price 20,000 shares ✗

date 6000)
Benefit already taxed on Exercise

20,000 ✗ (£2.6 -
£23)

28.000
chargeable gain
Annual Exemption ( 12,300)
Taxable 15,700
gain
-
CGT = 15,700 ☒ =
157=0

Proceeds
Disposal 80.000
-
=

Tax ( 1570 )
tax Proceeds 78,430
After
Cost shares include Exercise
of price of
-

£23 It includes
benefit
also
per share .

taxed
already on Exercise date .

taxed
Benefit already on Exercise date
-

between
represents difference market value on

date
grant£23
£26 G Exercise price
.
of of
 PAGE 175

=IQ-_
- -
- e - -
÷
✗

(⑥ additional ate
-
-

taxpayer
-
→

3- ←
-0--0
- -
- - -

- - - -

IF-I@iramje_r-Ees-7IeGu.ed
- - 2

#
⇐--_②E-→_
- - - e - - -
-

_☒o@

÷⇐÷÷⇐¥-_⇐÷÷⇐±
-00 _--0 I
-
-

.
- =

E-
E- _-→
 Damaina
pk Share options Alternative 2

(c)
Transfer of shares Alternative 9 - In this alternative as shares
options are
being
granted
under
approved Emt
plan therefore on

On date
transfer of grant
1 November there
of
-

shares on 2021 an 1 November 2021 will

,

be tax
Employment benefit will arise
,
on which income no .

tax G Exercise date there

payable
will be On November 2024
of
NK .
-

tax tax
Mug shares 5,000 shares £24.5 122.500 will be
except Employment
=
✗ no on
-
-
=

paid by Luiza (5000 )

benefit
Amount £1 £15 because
of
-
-5000 shares
-
✗ which will arise
,

Employment Benefit
117500 Exercise E- 23 £15 less than
price
of
was

Income tax 117.500 451 date

grant
✗ 52,875 ✓ mu £245
of
on
- = = .

NK =
Quoted G. Cash
benefit Employment Benefit -5000×4=24.5 -1--237=7500
- -

= -

2350°
=
✓
Class I Ee NIC =
117,500 ✗ 2% :
-
Income tax = 7500 ✗ 451 ± 3375

-
NIC = Class I Ee NK = 7500 ✗ II. ± 150
date
On
Disposal of
shares 10 November On
disposal of
10 November 20244
-

on
-

be CGT
payable payable
2024 ,
CGT will will be .

Proceed 5,000 shares £327 Proceed 5.000 f- 32-7 163505

Disposal ✗ 163,500
Disposal shares
=
-
= -
: ✗ =

(12%500) (115.000)
-

taxed Cost Exercise Price

-
Value
already -
: 5000 Shares ✗ £23 =

taxed ( 7500)
Benefit already
41.000
chargeable gain
Annual
Exemption (already
used ) 41,000
Taxable 41.000
chargeable gain (already
used )
gain
Annual
Exemption
CGT= 41,000 201=82--00
'
Taxable 41,000
gain41,000
-
✗

-
CGF . ✗
10¥ =
41=00
✓

Net BADR
of Luiza
-
increase in wealth
Proceed Net to wealth
Disposal 163,500 increase
-

( 5000 ) Proceed
Amount paid for
shares
Disposal 163,500
- -

-
Income tax (5-2,875) -

Exercise Price ( 115,000 )

-
Class 1 Ee NK (2350 ) -

Income tax ( 3375 )

-
CGT (8200 ) • Nlc ( 150 )
Net increase in wealth .
95,075 -

CGT ( 4200 )
Net increase in wealth 40,775
 Save as You Earn Plan ( SAYE) -
- - - a - -
Illustrative example
This
offered =t¥¥ assumed
-

option plan it that

.

share must be As in illustrative example is

-
- -

-
- -
- -

to all
employees who full
time
_② GAYE approved therefore
-

is
-
-

_→£¥
are i
- =

2
workers It is not
flexible plan
as
_ ↳ On
grant date there will be tax
- -
no
-

a
-
-
.

3
③
-

date there
-

has to this to On will be tax

employer offer plan
-
2 exercise no
,
y - - -
- -
- →-

3) On date CGT
all
employees .
However
employer keep can - -
Disposal ,
will be
payable
.

f- ②
- -
-

a condition
of employment up till
years
-
b- .

O
-

-
-

- - -
-

Employees contribution in CGT

disposal
monthly
§
-
make a
-

on
⑤
- - - -
•
•

'

£24,556
- -

to £500 £4
-

£5 DP
-
-

amount between ✗ 6139

plan
of
=
an =
.

_
Plan can continue
up till
3
01=25 Cost = £2.48 ✗ 6139 =

(1--15,225)
years
-

- - c -
- -

£9331
maturity option chargeable gain
On
__ - ---

plan has
e -
-

of employee
-
an
, ___ _② _-
-- __
←

)
-

to take cash 01=2 to take shares

according
-
Annual Exemption 2,300

--@
- - -
- - -

Taxable to
gain
to the -

funds plan
- - -

in .

IF shares
opted then price
- -
exercise
-
are
- - - -
-

be between 80% to 100%

WI Number shares
of of
can -

date Amount invested

Mu
grant in
plan
on
.

-
IF
employer wants he can
pay a
Proposed rules - Contributions =
£250 ✗ 12 months ✗ 5-
years
= £15,000
interest period
maturity of proposed
tax to their plan b- Bonus €250 901 €225
of
is
employees
1
free years
on
-
✗ =
, =
.

£15.225
funds acceptable under approved GAYE rules as

tax allowed
-
Further employer can also
pay
a
free maturity period is
3years-QR-syeo.rs .
-
Number
of
shares =
£15.225 = 6139
=
shares

investment allowed
bonus to employees once in
every
2-
years
.
2
,
monthly in
proposed plan £2.48
As SAYE is an
approved share
option amount between £5 to £750 exceeds
of
-

an ,

limit There tax

plan therefore employer will get allowed expense approved SAYE rules
,
as
approved is -
will be no on bonus as one

PGL £5 to £500 exempt

from trading
done bonus 2 is
expenses
after
all
years
.

on
.

Proposed SAYE plan to time

full
3 is all
on
plan .

open
This accordance with
employees
. is in

However condition
approved SAYE rules .

age of
21 is not permitted Employment condition
years
.

3
of SAYE years
is
acceptable because approved
condition
plan allows
employment
uptill cigars
.

4, Exercise price £248 is

acceptable
of
as

it £248 date
is ✗ too = 82%
Of
mu on
grant .

£3
Approved limit is between
to date
80% 1001
og
mu on
grant
.
 Share Incentive Plan ( SIP) tax
get exempt from income .

This
- share
option plan must be
open
to

workers All shares SIP must be

kept in
ownership
employees time
of
all who are
full
-

and have
completed 18 months on
job .

forIf
at least
-

syears
.
>
unapproved
It date
not
flexible plan for sold within then tax E.
grant
is Nic
eiyears
income
employer
a
-

he has to include be Exercise date

as all
employees will
payable
-
.
.

In date
SIP is announced in 3 levels level Disposal c
-
-

1 free
employer gives
shares
up till value

£3600 Each IF sold within IF sold but

per year 3years
3.

of level per employee after years

.

Income tax
before
SIP has certain E 5-
of performance
is
years
-
NK

targets defined
a
by Employer Income tax
payable Disposal Nic is
.
on -

In level to Proceed
payable
lower
2
Employer allows
employee
on
of
- .

These
purchase shares in
company shares DP
-
.

called
Partnership shares maximum value Mu
grant date
-
on .

are .

of Partnership
shares is lower
of
£1800 IF sold then tax
after syears
1 -
no income
,

of Employment
2) income
payable
10% 9 NIC is .

Partnership
Benefit of Purchasing
- shares is

There CGT sold

if
that :
-
is no on SIP shares even

allowed within
after 5g
it 5- 012
from
1, is ears
expense
years
an .

PSL
employment .

It condition level 3
of
2
for
, is

plan .

In
if employee
level 3 SIP achenes
g
-

performance target shares

him
employer give ,
can

Free
Matching worth £2
against every
of Partnership
til shares .

Maximum value
per year per employee
1) Free shares €3600

£1,800
2) Partnership shares

free £3600
3
,
Matching shares

f- 9,000

Additional to these shares

¥ employees
-

.
an

dividend these shares to purchase

of
uses

that dividend
further
shares in co .
then will
 = = __
-

Basic Employment income C. 021

②
-

③
-

→ - __ -

CO2
-
-

rate car will be

Salary of given
-
xxx
-
emission in

-0
=__→±--③
- -
- - - - -

-
-
-

Bonus xxx
question
-
.

__

É€
down to nearest
-②
Other round 5
②
for
-

Cash Allowance CO2

Always
-
xxx -

-_②-=
,
- - -
-

Benefits
-

Non Cash
, _g

-
✗ ✗✗ emission -

-
Less : Allowed Expenses (xxx) -

Employment income Xxx Car

Benefit
Price
Cost car List 27.000
of
- > =

-
Accessories
→
Non Cash
Benefits Accessories →
_⇐ =
installed
-
← -
were
-

E-
during current
IF
Employer has to
Capital contribution (5-000)
benefits
cash
given fiscal year
non

B-
-
.

cost 22,005
a - -

valued car
- -

those
benefits
-
>
be
of
then will Maximum
employee ,
-
-

allowed .

CO2 %
according defined
→

HMRC CO2
to
by / Km
some rules > is 127 It will
grams
-

emission
.

be down to It
car
Benefit Usage Benefit
rounded nearest
1, 5, 5 . will

Fuel
Benefit loan
gmslkm
6,
Benefit be
2> 125 .

Benefit 3
Gift Benefit
55 15%
3) Van
grams
-

4, Accommodation 8,
Exempt Benefit > IF CO2 emission exceeds 55 then It will 125-55×1 14%_
-

Benefit taken
✓
5 excess above 55 5 29%
for every
has increase
> if employer
rent then IF diesel donst meet RDE_-2 Standard 22.000×291×1%2
=

5317
Benefit
car on -
car - Car :
=

rent valve becomes

( 300)
Car
Benefit Car
Benefit
then coz I will increase
by 41
Usage contribution £30 ✗ 10 months
-
=
=
-

Petrol
for
to G Fuel f-24.600×291×10112
Employer %
IF has Maximum Diesel both 5945
given
car
employee Benefit
- a - -
-_
=

then
Benefit
will be 371 10.962
for private use car cars is .

calculated .

( 02% IF contribution then

Benefit Employee pays usage
Car Cost car ✗ it car
Benefit
is
of
-

:
-

from benefit
Cost deductible Cost List Price 78.000
of List
car car
of
- . - =

→ maximum
Price xxx discounts Capital contribution:(sooo> allowed
ignore
-
>

Fuel
Benefit
73.000
Transportation cost
by
cost
obtained car
of
-
-

xxx

to
Reg Cost IF
Employer provides fuel for private /km
E. Coz %
Legal
xxx
Employer use Coz emission
of
138
grams
will be
-
- -
.

to
employee then fuel benefit
-
Accessories ✗ ✗✗
will arise .
rounded down nearest 5 i to

contribution £5.000
-

Capital → Maximum 135

grams
1km .

-5
done
by Ee -
55 15%

Cost
of
Fuel
benefit
Base
figure Coz % 135-55×1 161
car ✗✗✗ = ✗ -
.

31%1-41=355
-

Disability accessories 9 Child car seat are 5

=

Benefit
73.000
Exempt accessories -
Car =
✗ 351 = 25.550

added current contribution 1840)

fiscal
Accessories 70
in
year Usage = ✗ 12 months
- -
-
.

taxed 24,710
fiscal
next
from
are
year
.
 - - - - - -
---@ -
- - -
- -
- - -

Accommodation
Benefit
----- - - - - -
-
- -
- - -
-
- -
-

IF Accommodation to
Employer has
provided
-

20.725
Employee then Accommodation
car car
Benefits
car
benefit
> 56.000 be
Benefit ✗ will
=

It calculated
> cost
of
car List Price = 45.000 assessed .
is in 3
parts :

contribution ( 5000) CO2 % /km 16=5 Basic

capital 167
charge higher
→
grams 1
of
→
:
,
( maximum)
Actual Rent
paid by Employer
55 151 . -

40.000 -
165-55×1 22-1 Annual value Accommodation ( Market rent)
of
-

5- Additional
> CO2 emission is 34
grams
1km . which is 37%
=
2,
Charge
owned
Benefit It
Fuel 24.600 9102 accommodation
applies
less than 50 > 371 when
therefore electric will :
✗ = -
is
range
be considered At 9 its exceeds £75.000
electric
by Employer
60 Total 20,720+9102 29.822 value
range of
. > = = .

miles coz I 7€ Additional

will be
charge
-
=
,

(cost
Car
Benefit
40.000 71×9112
Benefit £3500
of
House +
Improvements) £75.000
×
Van ✗
2100
U
-
=
=
>
-
.

1405) fuel to 669

-

Usage contribution 45 ✗ 9 months =

Benefit
=
-

Improvements done in current

fiscal year
Fuel 9112 1292 4169 assessed
Benefit 24.600 71.x are
fromPurchasefiscaldateyear
next
-
=
= ✗ . .

2987 IF Gap between House

of
-

9 Provision to
Benefit date is
van
employee of
provided 01=2 then
IF
Gyears
house
Employer private
has MV
for
van
Of
- a more
= ,

used instead
use
,
then Van
benefit will arise .

Planning in fuel
Benefit when
provided to
employee is

Private
- Fuel
benefit value donot depend on actual
of cost
.

Fuel Bacillary charge IF

consumed It
Employer paying any
based scale is
fixed of
.
is on
:

£24.600 then that

benefit
9 CO2 house
on emission .

support cost of ,

Fuel tax
Benefit exempted benefit added
then income be
¥ weight of benefit
van results will
wholly chargeable
-
is -
in as .

exceeds
Kgs value
Employment
van 3500 .
is in income .

takes Job Related Accommodation CJRA)

If a
person v. less private fuel from Company
-

then he should compare actual

fuel
cost with -
IF Accommodation provided to
employee is
regarded
tax JRA
fuel benefit then
he
facing
income is on .
as
,

Private cost EEE Basic exempted

fuel
is
E¥ ↳
charge
.
- =

>
2) Additional
charge
is
exempted
£24.600 Income tax 4920×201=984 taxable
Ancillary up till
20% 4920 is
charge
-
✗ = = 3. maximum
=

10%
of Employment
income .

An accommodation JRA
¥
-
is

for employment
It is
necessary
1
,

It better
for performance of job
is
↳

for security
3) It is reason .
 less than Gy more than 6 years

=-D
.

>
-
-

----
-
- - - -
- - - -

-⇐-- -⑥-
- -

_×
- - -
- -

=
-

=
-

_--

0--0
- ___ -

-0
- ---
-
-_

⑦
- __
-

11min14s - - ✓ -

②
-
- -

-
-
20121 ✓ -

✓
_→
34.000
←
1) Basic
charge =

higher of
-

Salary
paid by Employer -0 2400
-
Car
Actual rent
Benefit
1 = 0
-

, -

2) Annual value =76⑤ -

fuel
Benefit
3000

2, Additional
charge
1) Basic
charge higher 0J 39.400
=
:

(96.000+54.000)-75.000 ✗ 21=15000 i
,
Actual rent paid by Employer =
0 -
Accommodation
benefit > 3940

Ii, 9000 1 Basic 43,340

charge
3400 ✓
3,
Ancillary charge = . Annual value =
, = 0

Additional Additional
2
,
charge
2
, charge : 0

Basic
charge -7600×1%2=6967 [(100.000+15.000 8000) -75.000] ✗ 2% 960
Total Accommodation
Benefit 3
Ancillary benefit l0we¥
=
: .

+ ,
:

charge 1500×11/12=1375
Additional 2015 Actual 7,000
: i =
,

✓
3,
Ancillary charge Ancillary charge 101×39.400--3940
3400 = 0 ii ,
11,742
than
64
more

Total Accommodation 9000+9601-0--9960

.

-
-0 -

E- =
charge =
.

- -

- ③ -
- -0
than
gears .

Basic
higher of
1
,
charge =

actual
②
i
,
rent
paid by Employer = 0
✗ -

✓
6500
-

ii
-

,
annual value = ✓ -
_

___
-
20121 ✓ __
-

2 Additional
,
charge - -

(95,000 + 0) -75,000 ✗ 2-1 .

= 400
•
- -

2015

Basic
higher of
3, 0 1
Ancillary charge charge
= =
,

i
,
Actual rent
paid by Employer = 0

Accommodation Ii,
Total
benefit 6500+400=69-0-0
=
Annual value : 7000 ✓

2) Additional
charge
[(90,000+800077500)--75.000] ✗ 2% : 610

3,
Ancillary charge = 0

Accommodation 610+0=76-1
Total
Benefit
- : 7000 +
 -0 -0 ②
-=②--
Benefits
- _- - -

Usage Benefit Exempt - - -

- ___

April 2020
May June 2020
-

2020
These
IF
Employer provides any
asset to
employee benefits if provided by Employer
to
Employee
. ,
-
-
-

there tax
for private use which is other than then will be no 4 no Nic on them .

fuel Accommodation
Benefit for
car 4, mobile
1, 2
,
3, van
↳ One phone per employee 2020 21

45.000×201×3/12
Exempt Parking facility Benefit ( 2250
5> 2)
Usage
-

=
=

WI )
3) Educational subscriptions Gift Benefit
25.650
then
usage benefit will
apply
-

4, Subsidized canteen

Total 2020121 27,900

Pension
Benefit for
Furniture contribution
E¥ Laptop Television 5) plan by Employer
- -
.
-
.

6) canteen
Office
Usage benefit 7> Home worker
night
allowance
up till £6 / WI Gift Benefit higher of
- is : -
-

Cost that medical insurance

if employer
201 > 8 Asset
for
20.000
employees
✗ owns 1Mv
of
overseas =
- .

,
,

asset 9) Amount paid by Ee (600)

Daily allowance
up till £10 /
nigh if employee
is
-

Actual rent
paid by Employer
→

if employer abroad If
employee UK then £5 /night
Gift Benefit 19.400 -
- .

in .
is in

has taken 10 Relocation

,
cost paid by employer up till £8.000 -
.

asset child unlimited Cost Asset

exempted
facility
45,000
0g of
on 11, care is 2, =

child
facility already
assesed ( 18¥
Benefit
rent value care
If vouchers
if
.

Er owns .

partyrate
third then 45,000×201
provided
¥-0 exemption 25
of
are .
✗
-
-
- -

£55 / week 12
for
basic
is
taxpayer
-

: -

higher ratetaxpayer
€28 /week rate Book value 26,250
for additional
-

912 (600)
'

Usage Benefit £60,000 ✗ 20-1 ✗ 10.000 £25 /week

for taxpayer Amount
paid by Ee
25,650£
-
-
. = .
.

£30 (300)
contribution
GiftIFBenefit Gift Benefit
10 months
usage ✗ =
=

9700 asset to then

-

Employer gifts
an
employee
gift benefit
will arise .

Gift benefit is
higher of
-

- - -

---
- -

- -
-

l, market value Asset

of
xxx

Amount
paid by Employee (Xxx)
Benefit Actual Rent paid by Er 3000
Usage
- =
=

(300)
Gift Benefit
xxx
contribution months
Usage
= 25 ✗ 12

2700

2 cost Asset xxx

,
of assessed (xxx)
Benefit already
Book value Xxx

Amount
paid by Ee (xxx)

Gift Benefit
xxx
 15%
② E-
②
€-_ -→ Benefit
I
__
E- Loan
-

-
-
- -
= - - -
-

a- - -
-

IF to at interest
Employer gives loan
employee an
-

202012T
Benefit for rate rate
which less
official
than 2%
rate
official of
is
- =

70.000×201×5/12 interest loan (1-51)

Usage Benefit then
benefit
- =
= 5833 will arise . -

actual rate =

Gift Benefit ( ) rate interest 2% 05%

Wi 23,333
official of
is
Benefit
-
-
.

Benefit for IF
Total 29.166 balance
2020121 -
loan
changes during the
year
then -
lower
of
=
11¥
¥
Gift Benefit
>
higheroj loan

↳
benefit
Actual
will be
Pro rations
-
lower
of 1)
(28.000×0.51×51-2) (22,000×051×16-2) +

Asset 25,000 basis lowest

Average highest
b mu 2) 1- 113 -

g
→
= =

Ee (3500) 2
Amount paid by 2
,
28.000+22,000 ✗ 05% ✗

÷
= 115

Gift Benefit 21.500 IF loan balance below £10.000

-
-
remains 2

loan
throughout the
year ,
then
benefit
is
___
If it exceeded €10,000 ⑤É__
-

3 Cost Asset
- -

70.000
of exempted in
any
= .

assessed (43/66) the then low balances

Benefit already
also
part of will
year
get chargeable
70.000×20%11 37 rate 2%
official
.
- =

12 rate ( 1% )
-

actual =

Book value
Benefit
26,833 1%

(35-00)
- - - -

Ee
Amount paid by
15£
Gift Benefit 23,333 ✓
rate
official interest 2% lower
of
-

: =

of
-
-
=

( ( ÷)
153
actual rate interest (0% ) a) 19,000 it 1- 17,000×1-1 ✗
of
=
-
✗ ✗ -
=

Loan 2%
benefit
b) 19,000+17,000 ✗ 1% ✗ I = 150 -

12
Loan 68£
benefit
- =
34.000 ✗ 2-1. = 2
 ② _-_--

-②
-

Allowed
-
-

Expenses
-
-

- - -
← - -

allowable deductions
=

-
Allowed Expenses are the
PGL 48,000
Employment
from Contribution salary
-

Pension Plan Cash allowance 56,000

1) in
Occupational × 03=16,800
-

2, cost to purchase Partnership shares -

Mileage allowance 10,000×0.45 (4500)

Educational subscriptions paid
46.000 ✗ 025 ( 11,500)
by Employee
3) .

done 56.000 800 800

4,
Official expenses by an
employee
5) Allowance
Mileage
.

48,800
L Employment income

Allowance allowed expense

mileage
-
is an

HMRC
given by when
employee
an uses
- - - - -
- -

for official travelling

his vehicle
personal - -
- -

= -
. -

Salary 37,000
-

-
Cash allowance 26,000×026 = 6760

IF cash allowance (10,0007 0.45--14500)

Employer allowance
Mileage
×
giving
is
any
-
-

to his vehicle 16.000 0.25=14000)

employee for using own ✗

then that cash allowance will be ( 1740) (1740)

taxable 35,260
wholly
.

Official
travelling travelling to
-

means

temporary workplace .

Temproary workplace is

expected period of
one where work is

less than 24 months .

to permenant n°-1
Travelling workplace
- is

an
official travelling .
 PAGE 151

=
-
- -

=
-

=-3 = = -

- =

IE
- - -

①
- -

it
£5000 F- 5--5--0-5 Exempting
-
e -

up-ti
-
-

t_±¥m%u
-
- -
- -

-
-

unapproved
- - - - - -
-

→
-

- -
- -
- -

- -

-
-
- e - -

-
- -

£6000 Ti - - - - -0 -

f- 170011
- - -
- - -

¥÷
- -

months
_-_--_= -E___
 PAGE 152

→ Pension
-

_€→-----↳
.vn#EEd---=Q----EFeisePrice=-.----z 951=3-9-1 ✗

-__--€_--T→-_②
- -
- -
-

II E-
←

- - - -

I -_-_= -

a-
✗

%
- -

-
-

Pen

.is#----------------
 Demeter
(a) Inducement Poseidon Ltd
bonus
paid by
-
.

to Demeter £20.000 will be

of
a

It
chargeable Employment benefit
be
. will

taxable
wholly
.

Relocation Poseidon Ltd

allowance
paid by
-

€11.000 ( £5000 1- ( Elko 4) ) will be

of
✗

Exempt up till
-

£8.000 . Excess €3000 will

taxable
be
Employment benefit .

done
-

Actual expense on relocation

by
Demeter is
not an allowed expense .

-
share
options granted
to Demeter
tax
under non
advantaged scheme will

have
following consequences :

1, Grant date : 1 December 2021 = No tax

Exercise
2 date : 6 April 2027
Employment
=

benefit will arise .

Mv on Exercise date = €18.000

3,000 ✗ £6
=

Amount paid by Employee (1--11.970)

3000 ✗ ( f- 4.2×951:)
£6030
Employment benefit
date 6 April CGT will
Disposal
arise
3, = 2027 =

DP = 3000 Sh . ✗ £6 = 18.000

-
mu on Exercise date (18000)
3000 ✗ €6

again
0
 PAGE 168

____

- - -
-
- - -

- - - - - a -

- -
- f -

- -
-

- -
-
- - -
-

- - -
-
-

-
-
- -

-
-

:-O :•II_÷ñÉ
-

- -
- - - I - -
- -

I
II
-
-
-

- e -
-
-

€ --

⑤←o
-

=¥§¥0
_-@ a -
__

it
F-
-

-8
-

=
-
 Jessica
received
(a) statutory redundancy amount
of
-

£13,000 be tax
will
wholly exempt from
.

G
E- ✗
gratia payment of
£37.000
gift of
-

be
laptop will
partially exempt uptill
-

f- 30.000 However limit £30,000 will

of
.

reduce
by wholly exempt amount
of
£13,000 .

Exgratia amount
-
37.000

Gift of laptop ( )
-
Wi 680

Total E- 37.680
gratia 30,000
✗

Exemption
-

Already Exempt (13×00)

Remaining Ex 17,000 . (1%000)

amount
Chargeable 20,680
.

-
Income tax = 20.680 ✗ 45 =
9306
=

¥ Gift g laptop
Gift benefit Higher g
-
=

b asset 540
og paid
MU

Amount f)

Gift Benefit
540

cost Asset 850

of
2
,

£70 ) 850×201
Usage Benefit
.

Book value 680

Amount paid C- )
✓
Gift Benefit 680
 PAGE 173

- - -

I I =
-

I -

-
- - -

→-_
- - - -

E-¥-
- - -

8- - - - -

- = -
- I

ago ⑦
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 PAGE 174

-5--7-7-5=5
IT
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← - - - __ -

I _I__- -

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 Florina G kanji
(a) Provision Free Petrol

-
Florina
of
Fuel £24.500 £6370
Benefit
-
=
✗ 261 =

Income tax fuel £6370

Benefit 40=1--2548
-

on = ✗
=

Actual Pri te cost £3000 17.000--26=84

Juel
✗
-

19,000
actual Private cost exceeds
fuel
As

income tax
fuel benefit therefore it
on

is better to continue
taking private fuel
co
from
.

kanji
kanji's fuel taxed
benefit
-
will also be

Florina
being provided
on
as he is
,

with Fuel due to Florina .

Fuel
Benefit
-
: 24,500 × 231 = 5635
-

fuel
Income tax
Benefit
5635 ✗
-
on .
40=1--22--54

Private cost 805

fuel
- =

It better to
pay Kang private fuel
-
is

rather
tax
than
taking benefit from than actual
co . as

greater
is
on

Coot
benefit
fuel
.