es Ltd, having resigned from Question 1 May 2017 Lucas started a new job as the finance director of Happy times Ltd, having resigned previous job on 1 April 2017. Between 1 April 2017 and 30 April 2017 Lucas received no employment or state benefits As an inducement to accept the job, Lucas received a one off payment on 1 May 2017 from Happy times Ltd of 67 000. He also agreed to enter into a restrictive covenant with his new employer under which he agreed not to work for a competitor for a six month period, were he to leave the company. Happy times Ltd agreed to pay Lucas 2,500 for entering into the restrictive covenant. From 1 May 2017, Lucas received a gross annual salary of 102.000 and the following benefits: (a) Family medical insurance which cost his employer 900 per annum. (b) Lucas was provided with a petrol-powered motor car as from 1 May 2017 which has a list price of 24,600. The motor car has an official Co, emissions rate of 129 grams per kilometre. Lucas made a capital contribution of 5,600 towards the cost of the motor car when it was first provided to him by Happy times Ltd. Lucas was also provided with fuel for his private journeys. The total cost to Happy times Ltd of fuel for the motor car during the tax year 2017-18 was 1,500. (c) Lucas was provided with an interest free loan of 20,000 on 1 June 2017, which he used to renovate his main residence. He repaid 5,000 of this loan on 1 January 2018 and repaid another 3,000 on 1 March 2018. The taxable benefit in respect of this loan is calculated using the average method. (d) On 6 January 2018, Lucas was provided with a home entertainment system for his personal use. This was purchased by Happy times Ltd on 6 January 2018 for 3,200. The market value of the home entertainment system on 5 April 2018 was 2,400. (e) On 6 July 2017, Lucas was provided with a mobile telephone. The telephone is a smartphone which is mainly used by Lucas for personal internet access. It was purchased by Happy times Ltd on 6 July 2017 for 600. During 2017/18 Lucas paid a professional subscription of 524 which was not reimbursed by his employer. From 1 May 2017, he also made regular charitable donations through gift aid of 560 (net) per month. PAYE of 26,100 was deducted from his employment income. During 2017/18 Lucas received dividends from his unit trust of 12,500, interest on his ISA of 1,500 and interest on his building society account of 980. You are required to: a) Calculate the Income Tax payable by Lucas for 2017/18. (25 marks) b) Critically analyse the impact of donation made by Lucas during the tax year 2017/18 in his income tax an how this donation helped him to pay less tax. In the absence of this donation how much more income tax would be charged to him. (5 marks) es Ltd, having resigned from Question 1 May 2017 Lucas started a new job as the finance director of Happy times Ltd, having resigned previous job on 1 April 2017. Between 1 April 2017 and 30 April 2017 Lucas received no employment or state benefits As an inducement to accept the job, Lucas received a one off payment on 1 May 2017 from Happy times Ltd of 67 000. He also agreed to enter into a restrictive covenant with his new employer under which he agreed not to work for a competitor for a six month period, were he to leave the company. Happy times Ltd agreed to pay Lucas 2,500 for entering into the restrictive covenant. From 1 May 2017, Lucas received a gross annual salary of 102.000 and the following benefits: (a) Family medical insurance which cost his employer 900 per annum. (b) Lucas was provided with a petrol-powered motor car as from 1 May 2017 which has a list price of 24,600. The motor car has an official Co, emissions rate of 129 grams per kilometre. Lucas made a capital contribution of 5,600 towards the cost of the motor car when it was first provided to him by Happy times Ltd. Lucas was also provided with fuel for his private journeys. The total cost to Happy times Ltd of fuel for the motor car during the tax year 2017-18 was 1,500. (c) Lucas was provided with an interest free loan of 20,000 on 1 June 2017, which he used to renovate his main residence. He repaid 5,000 of this loan on 1 January 2018 and repaid another 3,000 on 1 March 2018. The taxable benefit in respect of this loan is calculated using the average method. (d) On 6 January 2018, Lucas was provided with a home entertainment system for his personal use. This was purchased by Happy times Ltd on 6 January 2018 for 3,200. The market value of the home entertainment system on 5 April 2018 was 2,400. (e) On 6 July 2017, Lucas was provided with a mobile telephone. The telephone is a smartphone which is mainly used by Lucas for personal internet access. It was purchased by Happy times Ltd on 6 July 2017 for 600. During 2017/18 Lucas paid a professional subscription of 524 which was not reimbursed by his employer. From 1 May 2017, he also made regular charitable donations through gift aid of 560 (net) per month. PAYE of 26,100 was deducted from his employment income. During 2017/18 Lucas received dividends from his unit trust of 12,500, interest on his ISA of 1,500 and interest on his building society account of 980. You are required to: a) Calculate the Income Tax payable by Lucas for 2017/18. (25 marks) b) Critically analyse the impact of donation made by Lucas during the tax year 2017/18 in his income tax an how this donation helped him to pay less tax. In the absence of this donation how much more income tax would be charged to him
