Question 1

Arun is an employer of Zurie ltd as a fashion designer. The following information is available for the tax year 2016-17:

Employment

a. During the tax year 2016-17, Arun received a gross salary of 48,600 from Zurie ltd. Aruns PAYE was 25,000.

b. Arun received the following bonus payments:

Date Paid	Entitlement to bonus - Date	Amount,
1 May 2016	25 March 2016	10,000
25 August 2016	25 July 2016	11,000
25 June 2017	10 April 2017	12,000

c. Arun contributes 6,500 to the companys occupational pension scheme. Zuriecontribute on Aruns behalf into the occupational pension scheme 6,500.

d. Arun also had a diesel-powered car, which has a list price of 24,200. The car cost Zurie ltd 23,200, and has an official CO2 emission rate of 167g/km.

Arun made a capital contribution of 3,000 towards the cost of the car when it was first provided to her. Aruns employer pays all the cars running expenses including fuel for her private use.

e. Zurie has provided Arun with living accommodation. The company purchased the property in 2014 for 210,000. Improvements costing 27,500 were made to the property during December2016. The annual rateable value of the property is 7,100.

f. Arun was provided with two mobile phones, each costing 300 and are used for both private and company calls.

g. On 5 May 2016, Zurie ltd paid a health club membership fee of 480 for the benefit of Arun.

h. Arun pays 500 annually for membership of the professional body, which she requires for her work.

Property income

a. Arun has two freehold properties.

b. The first property was let from 6 April 2016 to 31 August 2016at a monthly rent of 650, payable in advance. However, on 31 August 2016, the tenant left owing two months rent, which Arun could not recover.

c. The second property was let for the full 2016-17tax-year at a monthly rent of 2,000; payable in advance.

d. Arun had incurred advertising cost of 1,000.

e. Arun insured both the rental properties at a cost of 2,500for the year 2016-17.

Other information

f. During the year, Arun received bank deposit interest of 3,450 and dividends of 5,920.

g. On 4 August 2016, Arun received a premium bond prize of 100.

h. During the tax year 2016-17, Arun made Gift Aid donations totalling 2,400(net) to national charities.

i. During December 2016, Arun spent two nights overseas on company business and Zurie ltd paid Arun a daily allowance of 10 to cover the cost of personal expenses.

Required:

(i) Calculate the income tax payable by Arun for the tax year 2016-17. Provide explanations, workings and show with zero if any income/benefit is not used. Assume that the official interest rate is 3.00%.

(ii) Calculate the total amounts of both Class 1 and Class 1A national insurance contributions that will be paid by both Arun and Zurie ltd in respect of Aruns earnings and benefits for the tax year 2016/17.

Show all the working on the answer booklet.