You are a trainee accountant working for Hammond and Fogg LLP (HF), which specialises in advising start-up businesses. Your manager has sent you the following email from a start-up business client called Laura Winns. Laura worked as a sport scientist for Sport pic. Her taxable employment income in the tax year 2018/19 was 85.000 Laura has sent you the following email Email from: Laura Winns To: ACF 306 students Date: 16th November 2020 Subject: Business start up In the tax year 2019/20. I worked for Sport pic until I was made redundant on 5 April 2020. Since being made redundant I have been working on a business idea for a training website and business. I bought some computer equipment and software and have developed a website. I will start to trade on 1 January 2021 - my business will be called TrainUp The business will have two separate income streams: TrainUP will trade through a website. It will charge users a membership subscription providing access to information, tailored training advice and will also sell weights and sport training products via its website. TrainUP will receive 55,000 in 2021/22 for providing my services as a consultant to an exclusive celebrity gym. I have an idea about developing a new wearable tee shirt called Trainwell. I need cash to undertake research and development and to bring the product to market To carry out the research and development, I need to raise 500,000. I am considering two alternative sources of finance: A friend called Milo Jones could invest 500,000 in my business. Milo does not want to be an active partner in the business but would only invest if he could do so tax efficiently. 2. The bank has offered to lend me 500,000. I am reluctant to take on such a large loan. I can sell some assets and borrow the rest from the bank. I intend to take out an after-tax amount of 20,000 from the business each year to cover my living costs. Hope you can help advise me on how to structure my business. I will also need advice about my income tax liability for QUESTION 1 In the tax year 2019/20, Laura worked for Sport plc until she was made redundant on 5 April 2020. Her salary for the year ended 5 April 2020 was 54,000. She received the following redundancy package in 2019/20: Cash payment - This was the amount she was entitled to according to her employment contract (contractual payment) 160.000 Statutory redundancy payment 8,000 Bicycle at market value - bought by Sports pic under the bike to work 900 scheme for 1,000 She received the following employment benefits from Sport plc in the tax year 19/20: During the tax year 2019/20 Laura travelled 12,000 miles on business in her own car. She does not have a company car but is reimbursed 35p for each business mile she drives in her own car. After informing Laura of her redundancy, Sport plc paid for Laura to attend a training course on managing a small business. The course taught her how to build a website and trade online as well as basic tax and accountancy skills. Sports plc paid for the cost of the course which was 7.000. Laura paid a gift aid contribution of 3,000 a year. Laura received dividend income of 5,000 and savings income of 600. Required: 1.1 Calculate Laura's taxable employment income (including the redundancy package) for the tax year ended 5 April 2020. (12 marks) 1.2 Explain the tax treatment of the redundancy package and the training course paid for by Sports plc. (8 marks) 1.3 Calculate Laura's income tax liability for the tax year ended 5 April 2020. (12 marks) You are a trainee accountant working for Hammond and Fogg LLP (HF), which specialises in advising start-up businesses. Your manager has sent you the following email from a start-up business client called Laura Winns. Laura worked as a sport scientist for Sport pic. Her taxable employment income in the tax year 2018/19 was 85.000 Laura has sent you the following email Email from: Laura Winns To: ACF 306 students Date: 16th November 2020 Subject: Business start up In the tax year 2019/20. I worked for Sport pic until I was made redundant on 5 April 2020. Since being made redundant I have been working on a business idea for a training website and business. I bought some computer equipment and software and have developed a website. I will start to trade on 1 January 2021 - my business will be called TrainUp The business will have two separate income streams: TrainUP will trade through a website. It will charge users a membership subscription providing access to information, tailored training advice and will also sell weights and sport training products via its website. TrainUP will receive 55,000 in 2021/22 for providing my services as a consultant to an exclusive celebrity gym. I have an idea about developing a new wearable tee shirt called Trainwell. I need cash to undertake research and development and to bring the product to market To carry out the research and development, I need to raise 500,000. I am considering two alternative sources of finance: A friend called Milo Jones could invest 500,000 in my business. Milo does not want to be an active partner in the business but would only invest if he could do so tax efficiently. 2. The bank has offered to lend me 500,000. I am reluctant to take on such a large loan. I can sell some assets and borrow the rest from the bank. I intend to take out an after-tax amount of 20,000 from the business each year to cover my living costs. Hope you can help advise me on how to structure my business. I will also need advice about my income tax liability for QUESTION 1 In the tax year 2019/20, Laura worked for Sport plc until she was made redundant on 5 April 2020. Her salary for the year ended 5 April 2020 was 54,000. She received the following redundancy package in 2019/20: Cash payment - This was the amount she was entitled to according to her employment contract (contractual payment) 160.000 Statutory redundancy payment 8,000 Bicycle at market value - bought by Sports pic under the bike to work 900 scheme for 1,000 She received the following employment benefits from Sport plc in the tax year 19/20: During the tax year 2019/20 Laura travelled 12,000 miles on business in her own car. She does not have a company car but is reimbursed 35p for each business mile she drives in her own car. After informing Laura of her redundancy, Sport plc paid for Laura to attend a training course on managing a small business. The course taught her how to build a website and trade online as well as basic tax and accountancy skills. Sports plc paid for the cost of the course which was 7.000. Laura paid a gift aid contribution of 3,000 a year. Laura received dividend income of 5,000 and savings income of 600. Required: 1.1 Calculate Laura's taxable employment income (including the redundancy package) for the tax year ended 5 April 2020. (12 marks) 1.2 Explain the tax treatment of the redundancy package and the training course paid for by Sports plc. (8 marks) 1.3 Calculate Laura's income tax liability for the tax year ended 5 April 2020. (12 marks)