Question 1

In the tax year 2021/22 Henry Murray has been working as a finance manager earning 67,500 per annum. He is provided with a diesel car by his employer, list price 27,000, with CO² emissions of 123g/km. His employer pays for all the fuel for the car. He is also provided with a parking space at work in the centre of London that is worth 785 a year. There is a staff canteen available to all staff where Henry has a subsidised lunch each day; this costs him 1.40 and he estimates an equivalent meal elsewhere would be approximately 5.90. Henry had to pay professional subscriptions to the ICAEW of 405 this year.

Required:

Calculate for Henry the total amount of employment remuneration that he should include on his tax return for 2021/22. [Remuneration only required, no taxation.] 4 marks

Question 2

Henry also runs his own consultancy business, running personal finance workshops. This year he made profits of 8,700 after deducting personal withdrawals of 3,600. He kept accurate mileage logs and charged 245 in petrol costs to arrive at this profit, and deducted the cost of gifts to personal contacts who had referred clients to him, amounting to 970.

Required:

Calculate for Henry the correct profits that he should include on his tax return for 2021/22. 3 marks

Question 3

During the year Henry received interest on his bank savings account of 600 and dividends of 2,323. He has an ISA, on which he received 570 of interest during the year.

Required:

Calculate Henrys total income tax liability for the year 2021/22. You must include the employment income and profits calculated in Questions 1 and 2 in your calculation.

You will lose marks if you do not use the recommended layout shown in class.

10 marks

Question 4

In August this year Henry sold an antique table for 32,400. He had to pay 475 for special packaging, and agents fees of 5% of the sales price. He bought the table years ago at an auction for 295. In 1999 he had the legs repaired at a cost of 375.

Required:

Calculate for Henry what his capital gain will be, and the tax payable on the gain.

6 marks

Question 5

Anne Murray is planning to buy a property, in addition to the family home she and Henry own, for rental purposes. She is considering a property in Swansea costing 215,000. She has savings of 75,000, which she will use as a deposit, but will need to borrow the remaining amount for the purchase. She requests that you research and find a suitable buy-to-let mortgage for her.

She also wants to know what income she might expect to get as a return on her investment. Local agents have estimated that the monthly rent may be 1,750 per month, with agents fees for managing the property being charged at 5% of the rent.

Work out for Anne an estimation of the relevant costs of renting the property and the net rental income that she might expect to get. Anne has estimates for some of the other costs she will incur as follows:

Repairs and maintenance per year	800
Property insurance per year	275
Surveyors fees	650
Solicitors conveyancing fees	4,300
Gardener	780

Required:

1. Find a real buy-to-let mortgage for Anne and outline the details to her.

3 marks

2. What tax relief is there on the mortgage payments that Anne will be making?

2 marks

3. Calculate the net annual income that Anne can expect from her rental property (ignoring capital costs). Marks are awarded for using the recommended layout. 4 marks

4. Calculate the return on the income from her investment (ROI). 1 mark

5. Calculate the SDLT that Anne can expect to pay on this purchase. 2 marks

Total 12 marks

Question 6

1. Rachel and Mike are married. They are both retired and Mikes sister Donna is living with them as she is not well. Mike dies, but Donna now needs 24-hour care, so Rachel continues to care for her. Although Donna never married herself, she has a daughter Gina. Gina resents the fact that she did not know her father and is not in contact with her mother. Donna dies without leaving a will. Who will inherit? Why? 2 marks
2. Harveys father recently died in a car accident and Harvey inherited his fathers estate. His parents had separated when he was small and, when his mother remarried, he was brought up by his paternal grandparents because his father travelled a lot for work. His grandparents have been like parents to him. If Harvey does not write a will, who will inherit his estate? Why? 2 marks
3. Louis and Edith both had unhappy marriages and are divorced. They are now living together, but do not want to marry for some time yet. Louis has three children, a boy and two girls, and Edith has two younger boys. Louis has discovered that he has terminal cancer, and he has not made a will. Who will inherit his estate under intestacy rules? Give your reasons. 2 marks
4. In (c) above, all five children live together in the family home, and Louis is the main breadwinner. If he dies without making a will, what remedies does Edith have for her and her children? Explain the remedy and the possible outcomes. 4 marks