UNIVERSITY OF FINANCE AND ECONOMICS

ACCA
PROFESSIONAL SCHOOL OF INTERNATIONAL ACCOUNTANCY
AND FINANCE

ASSIGNMENT

Topic: Coursework assignment

Module: Foundations in Taxation

Module code: IFTX241
Class: C182

Performed: ..................... Bolormaa. B /B18FP1018/

..................... Badamtsetseg.N /B18FP1009/
..................... Sergelen. T /B18FP1052/
..................... Solongo. G /AC16P030/
..................... Nomuun. M /B18FP1042/
..................... Tsend. B /AC16P048/

Authorised ....................... Ariundalai. B

:

Date: 03.06.2020

Ulaanbaatar. 2020
Contents
The allocation of chapter 1

Nomuun 1

Question 1 1

Question 2 2

Question 3 2

Sergelen 3

Question 4 3

Question 5 3

Question 6 3

Bolormaa 4

Question 7 4

Question 8 6

Question 9 6

Solongo 7

Question 10 7

Question 11 8

Question 12 8

Question 13 8

Tsend 8

Question 14 8

Question 15 9

Question 16 9

Question 17 10

Badamtsetseg 11

Question 18 11

i
 Question 19 11

Question 20 12
Team member Number of question
Nomuun 2
Chapter 7
Nomuun 1
Chapter 8 Sergelen 3 The allocation of
Bolormaa 3
chapter
Solongo 4
Chapter 9 Tsend 4
Badamtsetseg 3

Total 20

Nomuun
Question 1

P has been in business as an online shopping for years preparing accounts to 31 June each year. In
the year to 31 June 2020, P had the following income and expenditure.

a) His turnover is $90,000, but he also earns by the ad he does on site for $5000.

b) It hired a part-timer for $500 a month.

c) The online delivery car is rented for $700 a month.

d) The car used privately for 20%, the tax written down is $5000.

Using the information, state the figures that would be entered into the relevant boxes.

Answers:

Box 15-90,000

Box 16-5000

Box 19-6000

ii
Box 20-8400

Box 32-1680

Box 46-1680

Box 50-900

Question 2

N has been a partner entitled to 30% of the partnership profit. He had $5000 when he joined the
partnership.

The partnership made up its account to 31 June each year and the recent result has been as
follows:

y/e 31.06.18 Loss $14,000

y/e 31.06.19 Profit $67,000

Using the information, state the figures that would be entered into the relevant boxes.

Answers:

Box 4-31.06.2019

Box 6-01.07.2019

Box 7-31.06.2019

Box 8-13400

Box 13-5000

Box 16-8400

Box 17-3000

Box 18-5400

Box 20-5400

Question 3

B has been in business as a make-up artist for years. She makes up accounts to 31 December each
year. In the year to 31 December 2020, B had the following income and expenditure.

a) Turn over $80,000

b) The total expense $10,000
c) B used the make-up which could have been used for $1000 out of the business during the
year.

iii
 Using the information, state the figures that would be entered into the relevant boxes.

Answers:

Box 15-80000

Box 31-10000

Box 60-1000

Box 61-1000

Sergelen
Question 4

Jenny had trading income of 28,000£, interest income of 15,000£, of which 8,000£ is interest on
National Savings & Investments Savings Certificates and remaining is bank interest, dividend
income of 5,000£ and premium on bond prize of 3,000£ in 2019/20. She also paid a loan interest of
2,000£ to buy machinery for employment use. What is the net income of Jenny for 2019/20?

Answer:

NSI SI DI Total

Trading income 28,000

Bank interest (15,000-8,000) 7,000

Dividend 5,000

Total income 28,000 7,000 5,000 40,000

Less eligible interest paid (2,000) (2,000)

Net income 26,000 7,000 5,000 38,000

Question 5

Which of the following statements relating to personal allowance is false?

a. Personal allowance is deducted before eligible interest paid

b. Personal allowance is firstly deducted from non-savings income

c. Any income covered by personal allowance is exempt from income tax

d. Personal allowance is reduced by 1 pound for every 2 pounds that adjusted net income
exceeds 100,000 pounds

Answer: A. (Personal allowance is deducted after the interest paid)

iv
Question 6

Lily receives employment income of 87,000£, building society interest of 12,000£ and dividends of
9,500£. She also pays interest of 1,300£ on a loan to invest in a co-operative. Calculate Lily’s
taxable income for 2019/20.

Answer:

NSI SI DI Total

Employment income 87,000

Building society interest 12,000

Dividend 9,500

Total income 87,000 12,000 9,500 108,500

Less eligible interest paid (1,300) (1,300)

Net income 85,700 12,000 9,500 107,200

Less personal allowance W1 (8,900) (8,900)

Taxable income 76,800 12,000 9,500 98,300

Working 1

Net income 107,200

Less income limit (100,000)

Excess 7,200

Normal personal allowance 12,500

Less half excess (7,200/2) (3,600)

Personal allowance 8,900

Bolormaa
Question 7

Aurora works for Sleeping Beauty Co. She has an annual salary of £70,000. She had the following
income and expenses for the tax year 2019/20.

v
  She received premium bond prize of  £300
 £5,000 from Building societies,  £260 from NS&I saving certificates
 Dividend of 5,900 received from Disney Co
 Her company pays an occupational pension scheme of  £1,090. Aurora also paid  £2,100
(net) to her personal pension contribution.
 She made payment of  £2,900 to UK charity under payroll giving scheme
 Aurora’s employer deducted £12,900 from income tax (PAYE). 

Calculate the income tax payable by Aurora in 2019/20.

Answer
W1 Employment income calculation
Salary  £70,000

Occupational pension £0

UK charity (£2,900)

£67,100

NSI SI DI

Employment income £67,100

Building society £5,000

NS&I saving certificates £0

Premium bond prize £0

Dividend  £5,900

£67,100 £5,000 £5,900

Personal allowance (£12,000

)

£55,100

Pension contribution = £2,100*100/80= £2,625 + £37,500 = £40,125

Tax payable for 2019/20

vi
 NSI £40,125 20% 8,025

55,100-40,125= 14,975 40% 5,990

SI 500  0% 0

5,000-500= 4,500 40% 1,800

DI 2,000 0% 0

5,900-2,000= 3,900 32.5% 1,268

Tax liability 17,083

PAYE (12,900)

Tax payable 4,183

Question 8
Ariel is employed by The Little Mermaid Co. A construction engineer often works out of the office
on construction sites. She had the following outcomes for the tax year 2019/20. 
 She uses a mobile phone so that she can keep in touch with the office. The phone is mainly
used for business calls. The month she pays £28, she made calls totaling 40 minutes, of
which 30 minutes were for business and 10 minutes were private. 
 Because she is a construction engineer, she has to wear protective suits at the construction
sites. She bought a fully protective suit for £100.
 She paid subscription fee of £80 to her professional institute
 Each day Ariel travels from her home to her office and from there travels to visit the
construction sites. She returns to the office before going home. All travel cost would be
£4,000. Home to office cost would be £1,000.
Calculate the total allowable deductions for the tax year 2019/20.

vii
Answer

Telephone charges £28*30/40min £21

Clothes £100

Subscription fee £80

Travel  Home to office not deductible £3,000

Allowable deductions £3,201

Question 9
Hobi is a basic rate tax payer. Included in his total income for the tax year 2019/20 were the
following amounts of investment income:
 National savings bank (NSB) interest £400
 Interest from an individual savings account (ISA) held in a UK bank £1,000
 Interest from a UK bank deposit account £6,000
 Interest from a UK bank current account £500
 Proceeds from national savings and investment (NS&I) certificates £3,000
 Dividend from UK companies £7,000
 Dividends from a UK ISA account £900
 Premium bond winnings £250
An extract from the self-assessment tax return is shown in the spreadsheet below. Complete the
entries for boxes 1, 2, 4 and 5 only.

1 Taxed UK interest 5 Other dividends

£ £

2 Untaxed UK interest 6 Foreign dividends

£ £

3 Untaxed foreign interest (up to £2,000) 7 Tax taken off foreign dividends

£ £

4 Dividends from UK companies

viii
Answer 

Box 1 £0
Box 2 £6,900
Box 4 £7,000
Box 5 £0

ISA & premium bond prize - exempt

NS&I certificates -exempt

Solongo
Question 10
Mary works for Vastbank at its Newcastle downtown area branch.Mary is sent at that point to work
all day at another branch in Morpeth for 20 months toward the finish of which she will come back
to the Newcastle branch. Morpeth is around 20 miles north of Newcastle.

What travel cost is Mary entitled to claim as a deduction?

a. None
b. Home to Newcastle branch
c. Newcastle branch to Morpeth branch
d. Home to Morpeth branch

Answer

The correct answer is D.

Despite the fact that Mary is investing every last bit of her energy at the Morpeth branch it won't be
treated as his typical working environment since her time of participation will be under 24 months.
Thus Mary can guarantee alleviation in full for the expenses of movement from his home to the
Morpeth branch.

Question 11
When may travel expenses be deducted from taxable earnings of an employee?

Answer
A representative can deduct travel costs brought about in going to the presentation of their
obligations or in venturing out to a spot which they need to go to in the exhibition of their
obligations.

Question 12
What do general earnings consist of?

Answer
General earnings are money or money’s worth earnings plus the cash equivalent of any taxable non-
monetary benefits.

ix
Question 13
When are earnings received by an employee who is not a director?

Answer
The time of receipt is the prior of when installment is made and when an individual gets qualified
for installment of the income.

Tsend

Question 14
Using example 3 Calculate the fuel benefit for Gerald, Jones, Ferry and Fey assuming also that
Ferry pays Golden Merchants plc £600 during 20X8/X9 towards the cost of private fuel, although
the actual cost of this fuel was £1’000.

Answer 
Gerald £24’100 x 28% x 8/12 = £4’499 The fuel was not available for first 4 months 
Jones £24’100 x 36% = £8’676 
Ferry £24’100 x 37% = £8’917
There is no reduction for the contribution made by Fernando since the cost of private fuel was not
fully reimbursed. 
Fey £24’100 x 22% = £5’302

Question 15
Richard, a sales manager, occupies a flat owned by his employer. Its annual value is £4’000 and
Richard pays his employer £500 per annum for use of the flat. The flat was originally purchased in
2008 for £100’000 and Richard moved into the property in 2018 when the property was worth
£120’000. 

Calculate the total benefit assessable on Richard for 2018/19 assuming an official rate of interest of
2.5%
Answer 
Accommodation benefit - Annual Value 4’000 
Less: Employee contribution for personal use (500) 
3’500 

Additional accommodation benefit (120’000 – 75’000) x 2.5% 1’125 

Total assessable benefit 4’625 

x
As the property had been owned by the employer for more than 6 years when Richard first occupied
it and the property had cost more than £75’000 an expensive accommodation benefit will arise
based on the market value when Richard first occupied it.
Question 16
Tony was given a loan of £35’000 by his employer on 31 March 20X8. Interest is payable on the
loan at 1% per annum. On 1 June 20X9 Tony repaid £5’000 and on 1 December 20X8 a further
£15’000. The remaining £15’000 was still outstanding on 5 April 20X9. Tony earns £30’000 per
annum. 

Calculate the taxable benefit for 20X8/X9 under 

1) the average method and 
2) the accurate method 
You should assume that the official rate of interest is 2.5% per annum.

Answer
1) Average method 
(35’000 + 15’000)/2 x 2.5% 625
Less: interest paid (as below) (258) 
367 

6/4/20X8 – 31/5/20X8 £35’000 x 1% x 2/12 58 

1/6/20X8 – 30/11/20X8 £30’000 x 1% x 6/12 150 
1/12/20X8 – 5/4/20X9 £15’000 x 1% x 4/12 50 
258

2) Accurate method 
6/4/20X8 – 31/5/20X8 £35’000 x 2.5% x 2/12 146 
1/6/20X8 – 30/11/20X8 £30’000 x 2.5% x 6/12 375 
1/12/20X8 – 5/4/20X9 £15’000 x 2.5% x 4/12 125 
646 
Less: Interest paid (as above) (258) 
388 

HMRC would be entitled to opt for the accurate basis as this gives a higher assessment.
Question 17
During 20X8/X9 Golden Merchants plc provided the following employees with company motor
cars: 
Gerald was provided with a new diesel powered company car on 6 August 20X8. The motor car
has a list price of £13’500 and an official CO2 emission rate of 122 grams per kilometre. The motor
car meets the RDE2 standard. 
Jones was provided with a new petrol powered company car throughout 20X8/X9. The motor car
has a list price of £16’400 and an official CO2 emission rate of 162 grams per kilometre. 

xi
Ferry was provided with a new petrol powered company car throughout 20X8/X9. The motor car
has a list price of £22’600 and an official CO2 emission rate of 249 grams per kilometre. Ferry paid
Golden Merchants plc £1’200 during 20X8/X9 for the use of the motor car. 
Fey was provided with a new petrol powered company car throughout 20X8/X9. The motor car had
a list price of £16’000 and an official CO2 emission rate of 90 grams per kilometre. 

Calculate the taxable benefit for 20X8/X9 for Gerald, Jones, Ferry and Fey.

Answer
Gerald 
The CO2 emissions are above 95g/km, so (23% + (120-95)/5%). 28%
The motor car was only available for eight months of 20X8/X9, so the £2’520
benefit is (13’500 x 28% x 8/12)
Jones
The CO2 emissions are above 95g/km, so (23% + (160-95)/5%). 36%
The motor car was available throughout 20X8/X9 so the £5’904
benefit is (16’400 x 36%).
Ferry
The CO2 emissions are above 95g/km, so 53%(23% + (245-95)/5%), 37%
but this is restricted to the maximum of 37%. 
The motor car was available throughout 20X8/X9 so the £7’162
benefit is (22’600 x 37% = 8’362 - 1’200). 
The contribution by Ferry towards the use of the motor car reduces the benefit.
Fey 
The CO2 emissions are between 76 - 94 grams per kilometre so 22%
The benefit is (£16’000 x 22%) £3,520
as Fey was provided with the car throughout the 20X8/X9 tax year.

Badamtsetseg
Question 18

Which one of the following is not travel expense for the purpose of an income tax employment
expense claim?

A Travel from home to temporary place of work

B Travel to visit a trade fair relevant to the employer’s business

C Travel to a client

D Travel to both of work place that one day a week and another work place that four days a week
The correct answer is D

xii
 Other answers could be claimed as a travel expense. Allowable deductions are qualifying travel
expense that include the cost of home to work if the employee does not spend more than 24 months
of continuous work at any one set(another words the temporary work) and other expense which is
incurred wholly and exclusively and necessarily in the performance of the duties of the
employment.

Question 19

Smith is employed by Corona Ltd but has been sent to work in YOLO for 23 months and has
provided following information regarding her income and outgoings for the tax year 2019/20:

Income

• A gross salary of £40,000.

• A bonus is entitled on 1 February 2019 which is paid on 8 April 2019.

Expenses

• Cost of travelling from home to YOLO is £2,500.

• A total amount of £120 paid to a UK charity under an approved payroll giving scheme.

• Personal pension contributions amounting to £2,160(net) paid

•Smith is a member of the company’s occupational pension scheme. In the tax year 2019/20 the
company paid £3,000.

Required

Calculate the employment income of Smith for the tax year 2019/20. Your answer should be
identifying by the use of zero (0) any item which is not or taxable.

Answer
Employment income – 2019/20

Salary 40,000

Bonus 0000000

Less:

Travel expense (2,500)

Payroll giving (120)

Occupational pension (3,000)

xiii
Employment income 34,380
1. The bonus is treated as received on the earlier of the time the payment is made and the time
when a person becomes entitled to payment of earnings.
2. The amount of personal pension scheme is deducted from the net income by the gross
amount.

Question 20

Emily, is a journalist, is employed by BBC. Her basic salary is £25,000 in 2019/20. Emily received
a bonus of £2,100 in August 2019 relating to 31 December 2018. She also received a bonus of
£8,000 in August 2020 relating to 31 December 2019. She incurred the following expense associate
with her job for 2019/20.

Cost of buying newspapers (read to keep herself informed) 500

Visit to the interviewee 900

Home to office travel 1,500

Membership of Chartered Institute of Journalists 100

3,000

Required

Compute Emily’s employment income for 2019/20, and explain briefly your reasoning.

Answer
£

Salary 25,000

Bonus received 2,100

27,100

Less:

- Travel cost (900)

- Institute membership (100)

Employment earning 2019/20 26,100

1. Journalists cannot claim a deduction for the cost of buying newspaper, since they are
merely preparing themselves to perform their duties
2. Home to business travel is not an allowable travel expense

xiv
3. The bonus for the year end 2019 is related to the tax year 2020/21 because the earnings are
taxable on the receipt basis.

xv