You have recently joined a small accountancy practice in the growing tax team and are required to prepare the tax calculations for 2019/20 for a client Arthur Shalamar. Arthur Shalamar is a professionally qualified Draftsman who works for a Design firm Grand Designs Limited. Arthur is also a keen photographer and runs a small part-time business alongside his employment. Using the information contained on the following pages, you are required to calculate both his income from employment, and from self-employment, and refer to the additional information in order to calculate the tax liabilities payable for Arthur for the 2019/20 tax year.

Employment Arthur Shalamar is a Draftsman with Grand Designs Ltd, a company which provides bespoke designs for organisations of all sizes. The following information is available for the tax year 2019/20:

(1) During the tax year 2019/20 Arthur was paid a gross annual salary of 40,000 by Grand Designs Ltd. Income tax of 18,500 was paid under PAYE.

(2) In addition to his salary, Arthur receives bonuses related to company profits and performance. Recent bonuses are as follows:

i. 4,000 based on profits for the Y.E, 31/7/19, paid 31/8/19

ii. 5,000 based on profits for the P.E. 31/12/19, paid 31/1/20

iii. 3,000 based on the profits for P.E. 31/3/20 paid 30/4/20

(3) Grand Designs Ltd paid a membership fee to the local Tai Chi Club in the sum of 1,800 for the benefit of Arthur.

(4) During the year a membership fee was paid to The Chartered Draftsmans Association by Arthur in the sum of 2,000

(5) Throughout the tax year, Arthur also had small, low interest, loans from the company of 7,000; 2,000; and 2,000. He paid 2% interest.

(6) Grand Designs Limited provided Arthur with a mobile phone with an annual cost of 650 which he used primarily for business purposes but approximately 20% of the calls were personal. In addition a second phone was provided for Arthurs son as an added benefit. This phone had an annual cost of 520.

(7) Throughout the tax year Grand Designs Ltd provided Arthur with a diesel powered motor car which has a list price of 26,500. The motor car cost Grand Designs Ltd 24,000, and it has an official CO2 emission rate of 154 grams per kilometre (g/km). Grand Designs Ltd pays all maintenance, service and running costs for the car at a cost of 4,500 per year. Grand Designs Ltd also provided Arthur with fuel for all journeys. Arthur contributed 300 per month towards the cost of the fuel which covered approximately half of the personal usage.

(8) Grand Designs Ltd paid for some books for Arthur in the sum of 35. These books were not work-related.

(9) Arthur has been provided with living accommodation for several years. The company had purchased the property for 140,000. The annual value of the property is 9,500, the running costs paid by the company are 3,500 and the property is furnished. The furnishings cost 6,000. Arthur contributed 250 per month towards the running costs of the property.

Other information : Note: ORI = 4% S

(1) During the tax year Arthur received building society interest of 3,000, interest on an ISA of 1,600, dividends from a Stocks and Shares ISA of 3,500, and dividends from his shares in UK companies of 5,000.

(2) He also received rental income from letting a house in the sum of 8,000. Arthur incurred expenses on the rental property of 1,000 for insurance and 2,000 mortgage interest.

(3) On 28 December 2019 Arthur won 16,000 on the National Lottery.

(4) During the tax year Arthur made gift aid donations totalling 4,800 to national charities.

(5) Arthur made various capital disposals during the year as follows:

i. Sold a painting in December 2019 for 9,000, which originally cost 5,000.

ii. Sold an antique vase for 13,000 which originally cost 4,500.

iii. Sold an antique for 33,000, which originally cost 32,000. Costs on disposal of 1,200 were incurred.

iv. Sold a holiday cottage for 130,000, which originally cost 60,000. Legal fees on disposal were 1,500. Legal fees on acquisition were 1,000.

Required:

(a) Calculate the income taxable value of all the Benefits In Kind received by Arthur from his employment in 2019/20. Your solution must identify the rules applied and show all workings.

(b) Calculate the Adjusted Trading Profits (including Capital Allowances) from selfemployment for Arthur for the Y.E. 31/10/19. Your solution must identify the rules applied and show all workings.

(c) Calculate the Income Tax payable by Arthur for the tax year 2019/20.

(d) Calculate the chargeable gains and Capital Gains Tax for Arthur and explain the rules as a basis for your calculation.

(e) Arthur is confused why his calculation of his car and motor expenses are different for his employment and self-employed income. Please briefly explain why the basis is different for each of these calculations. Note: ORI = 4% S