Chapter 8 Employment Income TX-UK FA2023
Reader Interactions
Comments
Leave a Reply
You must be logged in to post a comment.
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
20% off ACCA & CIMA Books
OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>
With regards to example 8 please explain why the bonus paid on the 30th of April 2024 formed part of his income although it was paid after the end of the tax year . Not sure if i missed something
Not sure if I missed something but in example 8, why is the home entertainment at 20%? I can’t find any explanation on it, what am i missing?
Opentuition notes 8.5 (Use of assets )
_
Amount assessed is the higher of:
-20% * market value of asset when first provided
-rental paid by employer
The home entertainment system is owned by the company and it is use of asset by the employee therefore you need to calculate 20% of the market value of the asset when first provided.
In the UK, the tax treatment of bonuses received from employment is generally based on the date the bonus is paid, rather than the date you become entitled to it. This means that the bonus is taxable in the tax year in which it is actually paid to you. (this is what ChatGPT says).
Which means in my opinion the last big exercise, second point should contain only 21400 GBP as bonus. Why did you considered 2 bonuses based on entitled dates?
In calculations also 440 dividends are added but 1000 GBP is at 0% so why they were added?
If you check Opentuition notes. You’ll find on pg. 76 under section 3. Assessable Emoluments that the bonus date received is taken as the EARLIER of the date of entitlement or when it was actually received.
Regarding dividends, they will be mentioned full in the TAXABLE INCOME, however when we will apply bands and rates in calculating TAX LIABILITY, that’s when it will be ultimately deducted under nil rat band.
Thank you very much ! God bless you.
It will be included in the income tax computation. However when determining the tax liability dividend would be taxed at 0% so no tax would be paid on it. Read the chapter on income tax computation.
Hi! I have a question about Example number 8 regarding Dividends received of 440, why did you note exempt because of the first 1,000 when the question is taxable income? The first 1,000 is about the Dividends Income Nil Band Rate right for computing Tax liability? but it doesn’t affect the computation and answer because the 440 is still included in taxable income. It just makes me confused.
Hey! I have the same doubt – when the tutor was initially going through all the different points, she said that because of the dividends income nil band rate, the £1000 will NOT be taxed. Why is it now that the £440 are added to the taxable income comp? Could someone please explain this to us?
The whole amount of dividends will be written in when calculating the taxable income. However, when we are finding the tax liability (applying bands and percentages), that’s when this dividend of 440 will be ultimately cancelled out because it falls in nil band rate.