Question 9: Income Tax Soraya works as an accountant for Armoured Cables Ltd (ACL). For the tax year she earned a salary of 38,000. ACL also provided her with the following benefits: 1. Her three-year old son attends ACL's workplace nursery. The cost to ACL of providing the workplace nursery is 4,800 a year. Soraya estimates that she would have to pay 7,200 for childcare if the workplace provision was not available. 2. ACL have paid 2,700 for training courses for Soraya. She is studying towards the Chartered Institute of Taxation qualification and ACL will stop paying their external auditors for tax advice once Soraya qualifies as a Chartered Tax Advisor. 3. Soraya has the use of a smartphone for business and personal use. The contract costs ACL 684 a year and Soraya uses the phone 20% for business and 80% personal. 4. In 2018, ACL provided Soraya with a 50,000 interest free loan to renovate her house. No repayments were made during the year. 5. ACL provide Soraya with a company car which cost 16,400. The car emits 112g/km of CO2. Soraya claimed 2580 in petrol expenses of which 25% was for business use and 50% for commuting from home to her normal workplace. 6. ACL pay 975 for Soraya's gym membership Soraya paid 285 for her annual membership of her professional accounting body and 1,225 in golf club membership fees. She estimates that 60% of her golf is dedicated to customer entertainment. Soraya earned 10,000 from letting out the basement flat which is part of her main residence. Required: a) Calculate the taxes payable by Soraya for the year to 31 March 2021, explaining whether benefits paid are taxable or not and expenses incurred allowable or not. 11 marks b) State and briefly describe the two HMRC forms ACL must provide Soraya to allow her to complete her tax return 4 marks Total: 15 marks Question 9: Income Tax Soraya works as an accountant for Armoured Cables Ltd (ACL). For the tax year she earned a salary of 38,000. ACL also provided her with the following benefits: 1. Her three-year old son attends ACL's workplace nursery. The cost to ACL of providing the workplace nursery is 4,800 a year. Soraya estimates that she would have to pay 7,200 for childcare if the workplace provision was not available. 2. ACL have paid 2,700 for training courses for Soraya. She is studying towards the Chartered Institute of Taxation qualification and ACL will stop paying their external auditors for tax advice once Soraya qualifies as a Chartered Tax Advisor. 3. Soraya has the use of a smartphone for business and personal use. The contract costs ACL 684 a year and Soraya uses the phone 20% for business and 80% personal. 4. In 2018, ACL provided Soraya with a 50,000 interest free loan to renovate her house. No repayments were made during the year. 5. ACL provide Soraya with a company car which cost 16,400. The car emits 112g/km of CO2. Soraya claimed 2580 in petrol expenses of which 25% was for business use and 50% for commuting from home to her normal workplace. 6. ACL pay 975 for Soraya's gym membership Soraya paid 285 for her annual membership of her professional accounting body and 1,225 in golf club membership fees. She estimates that 60% of her golf is dedicated to customer entertainment. Soraya earned 10,000 from letting out the basement flat which is part of her main residence. Required: a) Calculate the taxes payable by Soraya for the year to 31 March 2021, explaining whether benefits paid are taxable or not and expenses incurred allowable or not. 11 marks b) State and briefly describe the two HMRC forms ACL must provide Soraya to allow her to complete her tax return 4 marks Total: 15 marks
