ACADEMY OF FINANCE FINAL EXAM

ADVANCED EDUCATION PROGRAM TAXATION 1

Duration: 1 day
Code: 02/2021

Question 1 (2 marks): Stating regulations of personal allowance (PA) in calculating income tax
liability in the UK for the tax year 2020/21. In which case the amount of PA applied to taxpayers having
net income of equal or more than £125,000 in the tax year 2020/21 is not nil? Giving a specific
illustrating example.
Question 2 (4 marks):
Arthur received income from employment and investment in the tax year 2020/21.
1. In term of employment income, Arthur received monetary and non-monetary benefits, including:
Salary; Living accommodation which has cost of providing more than £75,000; Car and fuel; 02 benefits
which are exempt from income tax.
2. In term of investment income, Arthur received: 02 types of interest, one of them is exempt from
income tax; Dividends from a company in the UK.
Requirements:
1) Giving necessary detailed figures and information in order to identify Arthur’s income tax liability
for the tax year 2020/21. Knowing that: Arthur’s net income in the tax year 2020/21 was more than
£100,000. All figures must be related to information given above.
2) Computing Arthur’s income tax liability for the tax year 2020/21 basing on given figures and
information supposed.
Question 3 (4 marks): Vivian has also run her own business as a sole trader for many years and
makes up accounts to 31 March each year. Vivian prepared statement of profit or loss for the year ended
31 March 2021.
1. In arriving at her statement of profit or loss, there are some amounts which have to be reviewed
in order to identify taxable trading profits. They included 05 allowable expenses, 05 disallowable
expenses (these 10 expenses were deducted in arriving at Vivian’s statement of profit or loss) and 01
income not shown in the accounts.
2. In term of capital allowances:
- Acquiring 02 assets (one of them is a car) which qualify to be in main pool;
- Acquiring an asset which qualifies FYA;
- Acquiring an asset which is used partially for private purpose;
- Disposing 02 assets.
3. Besides income from trading, Vivian also received bank interest and dividends from a UK
company in the tax year 2020/21.
Requirements:
1) Giving necessary detailed figures and information in order to identify Vivian’s income tax
liability for the tax year 2020/21. All figures must be related to information given above.
2) Computing Vivian’s income tax liability for the tax year 2020/21 basing on given figures and
information supposed.
Exam paper’s length is not more than 8 pages.
Format: typewriting or handwriting file
(For typewriting file: Font Times New Roman, Size 14, Line spacing 1.5 lines)