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Paper code Examiner Department Tel

ACC307 Liyan Hou IBSS

ADVANCED TAXATION

QUESTION ONE

Solution.

Gross salary: £ 41,030

PAYE deduction: £ 19,130

Taxable salary: £21,900

Car and fuel benefits.

( 16,700× 15 ) +(16700 × 16)

Car benefits = = £ 5177
100

= £ 11523

4200 ×0.45
Fuel benefit = ×10 Months=£ 1575
12

Living accommodation = £ 8,600

Property income

Rental income = £ 664 × 4 = £ 3320

Premium received = £ 12,00

Expense allowed for tax purposes = £ 8400 for replacement

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Net property income = £3320 + 12000 – 8400 = £ 6920

Other income

Interest: £ 1260

Dividend: £ 5800

Total non-saving income = £ 50,518

Non saving income Saving income Dividend

£ 50,518 £ 1260 £ 5800
Tax = 0 Tax= 5800×0.0875= £ 507.5
Less PA £ 12570
37,948
Income tax
Basic rate 37700× 0.2= 7540
Higher rate- 248×0.4= 99.2
Total = £ 7639.2

Total liability tax 7639.2+0+507.5 = £ 81,46.7

Therefore, the income tax payable by Paul for the tax year 2022/23 is £ 81,46.7

QUESTION TWO

a.

Andy spent 190 days in the UK all through the tax year 2022/23, making him a resident

for tax purposes in the UK. Although Bob spent the best one hundred days inside the UK

throughout the tax 12 months 2022/23, he met the Automatic UK Residence Test standards,

seeing that he spent 183 days or greater in the UK in the preceding five tax years. Thus, he is

also handled as a resident for tax functions in the UK for the tax year 2022/23.
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b. Calculation of Tax-Adjusted Trading Profit and Trading Income Assessments:

Partnership's Tax-Adjusted Trading Profit:

Net profit = 87,780

Depreciation: £3,400 (Allowed expense)

Other expenses: £1,080 (£1,800 - £720 for entertaining employees, which is not allowable)

Wages and salaries: £50,900 (Allowed expense)

Tax-adjusted trading profit = 87780 – 3400 – 1080 -50900 = 32400

Partnership's Profit Sharing

80% to Andy: £32,400 × 80% = £25,920

20% to Bob: £32,400 × 20% = £6,480

Capital Allowances for Plant and Machinery

Car 1 (Main pool): £21,000 (CO2 emissions of 125 g/km, 80% business use)

Annual allowance = 21000 × 80% ×18% = 3024

Car 2 (Special rate pool, zero emissions): £10,150 (new car)

Annual allowance = £10,150×100%=£10,150

Car 3 (Main pool): £14,200 (CO2 emissions of 40 g/km, used by employees)

Annual allowance=£14,200×18%=£2,556

Car 4 (Main pool): £11,600 (CO2 emissions of 90 g/km, used by employees)

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Annual allowance=£11,600×18%=£2,088

Taxable Profit and Income Assessments

For Andy

Taxable profit

Taxable profit=£25,920

Total income assessment

Total income assessment=£25,920+£4,000(salary)=£29,920

For Bob:

Taxable profit

Taxable profit=£6,480

Total income assessment

Total income assessment=£6,480+£4,000(salary)= £10,480