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3 Mr Bigg is a senior employee at a UK based company which uses the Pay As You Earn (PAYE) system. The tax year 22/23

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3 Mr Bigg is a senior employee at a UK based company which uses the Pay As You Earn (PAYE) system. The tax year 22/23 has just finished and Mr Bigg is trying to get his tax affairs in order. Mr Bigg lives in England. Information in respect of the period 6 April 2022 to 5 April 2023 which may be helpful in determining his tax liability can be found in the table below: a) Determine the following amounts for Mr Bigg in respect of the 22/23 tax year: i) Total tax liability due in respect of income and capital gains tax, and how this is split between: ii) The amount of tax deducted at source through the PAYE system, and iii) The additional tax he will have to pay directly to the tax authorities himself. [For the avoidance of doubt, you should assume the employer will operate only employment-related activities through the PAYE system, where such an assumption is relevant] [8 marks] b) Determine how your answers to the above would have changed if the company had declined to pay the Private Medical Insurance premium of 1,500 for Mr Bigg; and Mr Bigg had instead paid for this premium out of his own net pay. [2 marks] Tax and allowance information for England and Wales (2022/23):- Personal Allowance 12,570 Capital Gains - Annual Exempt Amount 12,300 Interest - Tax free amounts: 1,000 (Basic); 500 (Higher); 0 (Additional). Also:- For low earners, up to 5,000 of interest may be taxed at 0% before applying the tax free amounts. Dividends - Tax free amount: 2,000 (Basic, Higher and Additional) * Reduced by 1 for each 2 of adjusted net income over 100,000 to minimum of zero. "* Applies to investments, excluding residential property *** Applies to residential property but main residence is exempt UK Corporation Tax rate 19%

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