WILLIAM WONG

William Wong is the finance director of Glossy Ltd. The company runs a publishing business.

The following information is available for the tax year 2020/21:

(1) William is paid a directors salary of 2,800 per month by Glossy Ltd.

(2) In addition to his directors salary, William received two bonus payments from Glossy Ltd during the tax year 2020/21. The first bonus of 22,000 was paid on 30 June 2020 and was in respect of the year ended 31 December 2019. William became entitled to this bonus on 15 March 2020. The second bonus of 37,000 was paid on 31 March 2021 and was in respect of the year ended 31 December 2020. William became entitled to this second bonus on 15 March 2021.

(3) William contributed 6% of his gross salary into Glossy Ltds HM Revenue and Customs registered occupational pension scheme.

(4) From 6 April 2020 until 31 December 2020 William used his private motor car for business purposes. During this period William drove 12,000 miles in the performance of his duties for Glossy Ltd, for which the company paid an allowance of 30 pence per mile.

(5) From 1 January 2021 to 5 April 2021 Glossy Ltd provided William with a diesel powered company motor car with a list price of 46,000. The diesel car does not meet the RDE2 standard. The motor car cost Glossy Ltd 44,500, and it has an official CO₂ emission rate of 169 grams per kilometre. Glossy Ltd also provided William with fuel for his private journeys.

(6) William suffered from an injury from an accident at home and he was unable to drive his motor car for two weeks during February 2021. Glossy Ltd provided him with a chauffeur for this period at a total cost of 1,599.

(7) Throughout the tax year 2020/21 Glossy Ltd provided William with a television for his personal use that had originally cost 3,825.

(8) Glossy Ltd pays an annual insurance premium of 558 to cover William against any liabilities that might arise in relation to his directorship.

(9) During May 2020 William spent ten nights overseas on company business. Glossy Ltd paid him a daily allowance of 10 to cover the cost of personal expenses such as telephone calls to Williams family.

(10) William pays an annual professional subscription of 450 to the Institute of Finance Directors, an HM Revenue & Customs approved professional body, and a membership fee of 800 to a golf club. He uses the golf club to entertain clients of Glossy Ltd.

Required:

(a) Calculate Williams assessable employment income for the tax year 2020/21. (10 marks)

2 Rhonda Smith

Rhonda has recently retired. In order to supplement her pension income, Rhonda has purchased a holiday cottage as an investment.

During the tax year 2020/21 she received the following income:

(1) Pension income of 5,920.

(2) Building society interest of 17,230.

(3) Winnings of 15,000 on a lottery ticket.

(4) Property income of 6,730 from letting out the holiday cottage. The letting does not qualify as a trade under the furnished holiday accommodation rules.

Rhonda will have to complete a self-assessment tax return for the first time in respect of the tax year 2020/21. She plans to submit her return online on 1 January 2022.

Required:

(a) Calculate Rhonda Smiths income tax liability for the tax year 2020/21. (5 marks)