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EAC
Cost of the Asset $860 000
scrap $60 000Life of Asset 5 Years
Bank Loan with 8%
Buy
Lease £160’000 per year for 5 years
Tax 25% in arrears
depreciation was on a straight line
can any one help with the depreciation calculation????????????????
and the second question was based on cashflow statement
i got a positive balance of $344’000 end of sep???
Section C
EAC
Cost of the Asset $860 000
scrap $60 000Life of Asset 5 Years
Bank Loan with 8%
Buy
Lease £160’000 per year for 5 years
Tax 25% in arrears
depreciation was on a straight line
what answers did you get???
and the second question was based on cashflow statement
i got a positive balance of $344’000 end of sep???
Section B
– Investment Appraisal
– Business Valuation — > Very Tough
– Foreign ExchangeSection C
– NPV —-> Got a Negative $450’000???
-WACC –> I got around 8%
– pref Shares –> ? :/
– Capm –> 9%
– Redeemable –> 2%Hey
I’ve had a look and seen the questions but no answers. Can you post the link with the marking scheme please.
Hi Dicky
Thanks for responding, on the giltz i miss read the question 🙁 So i think the 2500 is correct. How about the pension contributions was there a calculation needed for an annual charge? (as her employment income is above £210k so cap is at £10k and the pension contribution is £30k….?)
Also the car millage Benefit calculation were those the figures you received? Basically are there any differences in my answers compared to yours..Hey guys can i have your intake on the Employment income (Petula) question and also Zhi Question. Much appreciated 🙂
Hi Dicky123
I agree with the point you made on the capital allowances, How about the rest of the questions in terms of the gains and property loss etc.
Also i would really appreciate the feedback on the Employment income for Petula.
For question 32 regarding Online LTD income :
Trading Income £896,700
++ Depreciation £21,660
++ amortisation £9,000Total Trading Income £927’360
LESS:
Lease (90’000 x (10-9) x 0.02)=16200 (90k-16.2k/10) (£7380)
Capital Allowance (£12676)
working 18% I 8%
MP I SRP
56700 I 12400
13700 I
(17200) I (9300)
——————————-
Allowance 9576 + 3100
———————————————————
TTP £907’304QCD (£6,800)
Disposal of Shares
24 June 2010 40,000 shares @ £49,300
sold 22,000 for £62,200
22 000 (22/40 x 49300) £27’115 index (@0124) 3362
———————————————————————————
Gain 1 = £ 31’723Gain 2 = £ 64’644
sold 18’000 for £90,600
(18’000) @ (£22’185 + index 3771)
Net gains (£ 64’644 + £ 31’723 – 4700) £91’667
Property loss (12500)
—————————————————————————————————-TTP £979’671
b) Corporation tax can be reduced by transferring the capital gains/losses to another company in the group. join election must me made
For question 31 regarding Petula Employment income :
1) Salary 230’000
2) Bonus (18600 + 22400) 41000
3) Car Millage (3000+5350) 8350
4) professional subscription (630)
Golf 05) personal loan (140)
6) Pension Contribution Exempt Benefit 0
7) Property (12000-420-1640) 9940
8) Room (8900-7500) 1400
9) Gilt interest 3000
——————————————————————————Total £292’920
b) Pension allowance is like the PA it is capped between income of £150k to £210k)
any income between that amount gets /2 and taken of the annual amount. income
above £210k then is capped to £10k.I dont have the questions for section A and B, section c was posted on the acca website.
31 You should assume that today’s date is 15 December 2016.
Zhi has been self-employed since 2000, preparing accounts to 31 December. On 1 December 2016, Zhi purchased
a new freehold warehouse for £164,000 for use in his business, but this purchase has resulted in Zhi having cash
flow problems. He has various tax payments becoming due over the next two months, and would like to reduce or
postpone these payments as much as possible.
Income tax and national insurance contributions (NICs)
Zhi’s income tax liabilities and class 4 NICs for the tax years 2014–15, 2015–16 and 2016–17 are, or are forecast
to be:
2014–15 2015–16 2016–17
£ £ £
Income tax liability 25,200 27,600 18,000
Class 4 NICs 4,084 4,204 3,724
Zhi has not made any claims to reduce his payments on account.
Capital gains tax (CGT)
Zhi has a CGT liability of £12,980 becoming due for payment on 31 January 2017. This is in respect of a freehold
office building which was sold for £210,000 on 10 December 2015, resulting in a chargeable gain of £76,000. The
office building had always been used for business purposes by Zhi.
Zhi is a higher rate taxpayer. No claim has been made for rollover relief.
Value added tax (VAT)
Zhi has forecast that he will have to pay VAT of £20,200 on 7 February 2017 to HM Revenue and Customs (HMRC)
in respect of the VAT quarter ended 31 December 2016.
On 12 December 2016, Zhi despatched goods relating to an exceptionally large credit sale of standard rated goods
of £45,600 (inclusive of VAT). He has not yet issued a sales invoice for this sale.
Because the customer is unlikely to pay until 28 February 2017, Zhi is considering not issuing a sales invoice until
1 February 2017.
PAYE and NICs
Zhi will have to pay PAYE and NICs of £5,724 electronically on 22 January 2017 to HMRC in respect of his two
employees for the tax month running from 6 December 2016 to 5 January 2017.
This includes amounts for bonuses which Zhi was planning to pay to his two employees on 1 January 2017, but
could delay payment until 10 January 2017. The bonuses are in respect of the year ended 31 December 2016, and
they will be treated as being received on whichever is the date of payment.
The first employee has a gross annual salary of £20,000 and is to be paid a bonus of £1,500. The second employee
has a gross annual salary of £55,000 and is to be paid a bonus of £5,000.
6
Required:
(a) Calculate the amount by which Zhi can claim to reduce his self-assessment income tax and NICs due for
payment on 31 January 2017 without incurring interest or penalties. (2 marks)
(b) Calculate the amount by which Zhi’s CGT liability due for payment on 31 January 2017 will be reduced if
he makes a claim for rollover relief based on the warehouse purchased on 1 December 2016 for £164,000.
(3 marks)
(c) Explain whether Zhi can reduce the amount of VAT payable on 7 February 2017 by not issuing a sales
invoice for the credit sale of £45,600 until 1 February 2017, and, if so, by how much the payment will be
reduced. (2 marks)
(d) Calculate the amount by which Zhi’s PAYE and NICs due on 22 January 2017 will be reduced if he delays
the payment of employee bonuses until 10 January 2017, and state when the postponed amount will be
payable.
Note: Your calculations should be based on annual income tax and NIC thresholds.1 You should assume that today’s date is 15 December 2016.
Zhi has been self-employed since 2000, preparing accounts to 31 December. On 1 December 2016, Zhi purchased
a new freehold warehouse for £164,000 for use in his business, but this purchase has resulted in Zhi having cash
flow problems. He has various tax payments becoming due over the next two months, and would like to reduce or
postpone these payments as much as possible.
Income tax and national insurance contributions (NICs)
Zhi’s income tax liabilities and class 4 NICs for the tax years 2014–15, 2015–16 and 2016–17 are, or are forecast
to be:
2014–15 2015–16 2016–17
£ £ £
Income tax liability 25,200 27,600 18,000
Class 4 NICs 4,084 4,204 3,724
Zhi has not made any claims to reduce his payments on account.
Capital gains tax (CGT)
Zhi has a CGT liability of £12,980 becoming due for payment on 31 January 2017. This is in respect of a freehold
office building which was sold for £210,000 on 10 December 2015, resulting in a chargeable gain of £76,000. The
office building had always been used for business purposes by Zhi.
Zhi is a higher rate taxpayer. No claim has been made for rollover relief.
Value added tax (VAT)
Zhi has forecast that he will have to pay VAT of £20,200 on 7 February 2017 to HM Revenue and Customs (HMRC)
in respect of the VAT quarter ended 31 December 2016.
On 12 December 2016, Zhi despatched goods relating to an exceptionally large credit sale of standard rated goods
of £45,600 (inclusive of VAT). He has not yet issued a sales invoice for this sale.
Because the customer is unlikely to pay until 28 February 2017, Zhi is considering not issuing a sales invoice until
1 February 2017.
PAYE and NICs
Zhi will have to pay PAYE and NICs of £5,724 electronically on 22 January 2017 to HMRC in respect of his two
employees for the tax month running from 6 December 2016 to 5 January 2017.
This includes amounts for bonuses which Zhi was planning to pay to his two employees on 1 January 2017, but
could delay payment until 10 January 2017. The bonuses are in respect of the year ended 31 December 2016, and
they will be treated as being received on whichever is the date of payment.
The first employee has a gross annual salary of £20,000 and is to be paid a bonus of £1,500. The second employee
has a gross annual salary of £55,000 and is to be paid a bonus of £5,000.
6
Required:
(a) Calculate the amount by which Zhi can claim to reduce his self-assessment income tax and NICs due for
payment on 31 January 2017 without incurring interest or penalties. (2 marks)
(b) Calculate the amount by which Zhi’s CGT liability due for payment on 31 January 2017 will be reduced if
he makes a claim for rollover relief based on the warehouse purchased on 1 December 2016 for £164,000.
(3 marks)
(c) Explain whether Zhi can reduce the amount of VAT payable on 7 February 2017 by not issuing a sales
invoice for the credit sale of £45,600 until 1 February 2017, and, if so, by how much the payment will be
reduced. (2 marks)
(d) Calculate the amount by which Zhi’s PAYE and NICs due on 22 January 2017 will be reduced if he delays
the payment of employee bonuses until 10 January 2017, and state when the postponed amount will be
payable.
Note: Your calculations should be based on annual income tax and NIC thresholds1 You should assume that today’s date is 15 December 2016.
Zhi has been self-employed since 2000, preparing accounts to 31 December. On 1 December 2016, Zhi purchased
a new freehold warehouse for £164,000 for use in his business, but this purchase has resulted in Zhi having cash
flow problems. He has various tax payments becoming due over the next two months, and would like to reduce or
postpone these payments as much as possible.
Income tax and national insurance contributions (NICs)
Zhi’s income tax liabilities and class 4 NICs for the tax years 2014–15, 2015–16 and 2016–17 are, or are forecast
to be:
2014–15 2015–16 2016–17
£ £ £
Income tax liability 25,200 27,600 18,000
Class 4 NICs 4,084 4,204 3,724
Zhi has not made any claims to reduce his payments on account.
Capital gains tax (CGT)
Zhi has a CGT liability of £12,980 becoming due for payment on 31 January 2017. This is in respect of a freehold
office building which was sold for £210,000 on 10 December 2015, resulting in a chargeable gain of £76,000. The
office building had always been used for business purposes by Zhi.
Zhi is a higher rate taxpayer. No claim has been made for rollover relief.
Value added tax (VAT)
Zhi has forecast that he will have to pay VAT of £20,200 on 7 February 2017 to HM Revenue and Customs (HMRC)
in respect of the VAT quarter ended 31 December 2016.
On 12 December 2016, Zhi despatched goods relating to an exceptionally large credit sale of standard rated goods
of £45,600 (inclusive of VAT). He has not yet issued a sales invoice for this sale.
Because the customer is unlikely to pay until 28 February 2017, Zhi is considering not issuing a sales invoice until
1 February 2017.
PAYE and NICs
Zhi will have to pay PAYE and NICs of £5,724 electronically on 22 January 2017 to HMRC in respect of his two
employees for the tax month running from 6 December 2016 to 5 January 2017.
This includes amounts for bonuses which Zhi was planning to pay to his two employees on 1 January 2017, but
could delay payment until 10 January 2017. The bonuses are in respect of the year ended 31 December 2016, and
they will be treated as being received on whichever is the date of payment.
The first employee has a gross annual salary of £20,000 and is to be paid a bonus of £1,500. The second employee
has a gross annual salary of £55,000 and is to be paid a bonus of £5,000.
6
Required:
(a) Calculate the amount by which Zhi can claim to reduce his self-assessment income tax and NICs due for
payment on 31 January 2017 without incurring interest or penalties. (2 marks)
(b) Calculate the amount by which Zhi’s CGT liability due for payment on 31 January 2017 will be reduced if
he makes a claim for rollover relief based on the warehouse purchased on 1 December 2016 for £164,000.
(3 marks)
(c) Explain whether Zhi can reduce the amount of VAT payable on 7 February 2017 by not issuing a sales
invoice for the credit sale of £45,600 until 1 February 2017, and, if so, by how much the payment will be
reduced. (2 marks)
(d) Calculate the amount by which Zhi’s PAYE and NICs due on 22 January 2017 will be reduced if he delays
the payment of employee bonuses until 10 January 2017, and state when the postponed amount will be
payable.
Note: Your calculations should be based on annual income tax and NIC thresholds.Section C – ALL THREE questions are compulsory and MUST be attempted
Please write your answers to all parts of these questions on the lined pages within the Candidate Answer Booklet.
31 You should assume that today’s date is 15 December 2016.
Zhi has been self-employed since 2000, preparing accounts to 31 December. On 1 December 2016, Zhi purchased
a new freehold warehouse for £164,000 for use in his business, but this purchase has resulted in Zhi having cash
flow problems. He has various tax payments becoming due over the next two months, and would like to reduce or
postpone these payments as much as possible.
Income tax and national insurance contributions (NICs)
Zhi’s income tax liabilities and class 4 NICs for the tax years 2014–15, 2015–16 and 2016–17 are, or are forecast
to be:
2014–15 2015–16 2016–17
£ £ £
Income tax liability 25,200 27,600 18,000
Class 4 NICs 4,084 4,204 3,724
Zhi has not made any claims to reduce his payments on account.
Capital gains tax (CGT)
Zhi has a CGT liability of £12,980 becoming due for payment on 31 January 2017. This is in respect of a freehold
office building which was sold for £210,000 on 10 December 2015, resulting in a chargeable gain of £76,000. The
office building had always been used for business purposes by Zhi.
Zhi is a higher rate taxpayer. No claim has been made for rollover relief.
Value added tax (VAT)
Zhi has forecast that he will have to pay VAT of £20,200 on 7 February 2017 to HM Revenue and Customs (HMRC)
in respect of the VAT quarter ended 31 December 2016.
On 12 December 2016, Zhi despatched goods relating to an exceptionally large credit sale of standard rated goods
of £45,600 (inclusive of VAT). He has not yet issued a sales invoice for this sale.
Because the customer is unlikely to pay until 28 February 2017, Zhi is considering not issuing a sales invoice until
1 February 2017.
PAYE and NICs
Zhi will have to pay PAYE and NICs of £5,724 electronically on 22 January 2017 to HMRC in respect of his two
employees for the tax month running from 6 December 2016 to 5 January 2017.
This includes amounts for bonuses which Zhi was planning to pay to his two employees on 1 January 2017, but
could delay payment until 10 January 2017. The bonuses are in respect of the year ended 31 December 2016, and
they will be treated as being received on whichever is the date of payment.
The first employee has a gross annual salary of £20,000 and is to be paid a bonus of £1,500. The second employee
has a gross annual salary of £55,000 and is to be paid a bonus of £5,000.
6
Required:
(a) Calculate the amount by which Zhi can claim to reduce his self-assessment income tax and NICs due for
payment on 31 January 2017 without incurring interest or penalties. (2 marks)
(b) Calculate the amount by which Zhi’s CGT liability due for payment on 31 January 2017 will be reduced if
he makes a claim for rollover relief based on the warehouse purchased on 1 December 2016 for £164,000.
(3 marks)
(c) Explain whether Zhi can reduce the amount of VAT payable on 7 February 2017 by not issuing a sales
invoice for the credit sale of £45,600 until 1 February 2017, and, if so, by how much the payment will be
reduced. (2 marks)
(d) Calculate the amount by which Zhi’s PAYE and NICs due on 22 January 2017 will be reduced if he delays
the payment of employee bonuses until 10 January 2017, and state when the postponed amount will be
payable.
Note: Your calculations should be based on annual income tax and NIC thresholds.Operating profit
Online Ltd’s operating profit for the year ended 31 March 2017 is £896,700. Depreciation of £21,660 and
amortisation of leasehold property of £9,000 (see the leasehold property note below) have been deducted in arriving
at this figure.
Leasehold property
On 1 April 2016, Online Ltd acquired a leasehold office building, paying a premium of £90,000 for the grant of a
ten-year lease. The office building was used for business purposes by Online Ltd throughout the year ended 31 March
2017.
Plant and machinery
On 1 April 2016, the tax written down values of plant and machinery were as follows:
£
Main pool 56,700
Special rate pool 12,400
The following transactions took place during the year ended 31 March 2017:
Costs/(proceeds)
£
14 May 2016 Sold a motor car (18,100)
18 July 2016 Sold all items included in the special rate pool (9,300)
27 January 2017 Purchased a motor car 13,700
The motor car sold on 14 May 2016 for £18,100 was originally purchased during the year ended 31 March 2016
for £17,200. This expenditure was added to the main pool.
The motor car purchased on 27 January 2017 for £13,700 has a CO2 emission rate of 90 grams per kilometre. The
motor car is used as a pool car by the company’s employees.
Qualifying charitable donations
During the year ended 31 March 2017, Online Ltd made qualifying charitable donations of £6,800. These were not
included in arriving at the operating profit above.
Disposal of shareholding in Network plc
On 20 March 2017, Online Ltd sold its entire shareholding of £1 ordinary shares in Network plc for £90,600. Online
Ltd had originally purchased 40,000 shares (less than a 1% shareholding) in Network plc on 24 June 2010 for
£49,300. On 7 October 2013, Online Ltd sold 22,000 of the shares for £62,200.
Indexation factors are as follows:
June 2010 to October 2013 0·124
June 2010 to March 2017 0·170
October 2013 to March 2017 0·040
Brought forward losses
As at 1 April 2016, Online Ltd had the following brought forward amounts of unused losses:
£
Capital loss 4,700
Property business loss 12,500
Planned acquisition
Online Ltd currently does not have any 51% group companies. However, Online Ltd is planning to acquire a 60%
shareholding in Offline Ltd in the near future. Offline Ltd is profitable and will pay regular dividends to Online Ltd.
10
Required:
(a) Calculate Online Ltd’s taxable total profits for the year ended 31 March 2017. (13 marks)
(b) Briefly explain how the acquisition of Offline Ltd will affect the calculation and payment of Online Ltd’s
corporation tax liability in future years.Petula has been employed as a sales manager by Downtown plc since 6 April 2009. The following information is
available in respect of the tax year 2016–17:
(1) During the tax year 2016–17, Petula was paid a gross annual salary of £230,000.
(2) In addition to her salary, Petula has been paid the following bonuses by Downtown plc:
Amount Date of payment Date of entitlement In respect of the six-month
£ period ended
21,200 30 April 2016 1 April 2016 31 December 2015
18,600 31 October 2016 1 October 2016 30 June 2016
22,400 30 April 2017 1 April 2017 31 December 2016
(3) During the tax year 2016–17, Petula used her private motor car for both private and business journeys. The total
mileage driven by Petula throughout the tax year was 26,000 miles, with all of this mileage reimbursed by
Downtown plc at the rate of 60p per mile. However, only 21,000 miles were in the performance of Petula’s
duties for Downtown plc.
(4) Petula pays an annual professional subscription of £630 which is relevant to her employment with Downtown
plc. Petula also pays an annual subscription membership fee of £1,840 to a golf club which she uses to entertain
Downtown plc’s clients. Downtown plc does not reimburse Petula for either of these costs.
(5) During the tax year 2016–17, Petula paid interest of £140 on a personal loan taken out on 6 April 2016 to
purchase a computer for sole use in her employment with Downtown plc.
(6) Each tax year since 6 April 2009 (including the tax year 2016–17), Downtown plc has contributed £30,000
into the company’s HM Revenue and Customs’ registered money purchase occupational pension scheme on
Petula’s behalf. Petula has never personally made any pension contributions.
(7) Petula owns a freehold house which was let out furnished throughout the tax year 2016–17. The total amount
of rent received during the tax year was £12,000.
During August 2016, Petula purchased a new washer-dryer for the property at a cost of £730. This was a
replacement for an old washing machine which was scrapped, with nil proceeds. The cost of a similar washing
machine would have been £420.
During November 2016, Petula purchased a new dishwasher for the property at a cost of £580. The property
did not previously have a dishwasher.
The other expenditure on the property for the tax year 2016–17 amounted to £1,640, and all of this is allowable.
(8) During the tax year 2016–17, Petula rented out one furnished room of her main residence. During the year, she
received rent of £8,900 and incurred allowable expenditure of £2,890 in respect of the room. Petula always uses
the most favourable basis as regards the tax treatment of the furnished room.
(9) On 1 July 2016, Petula purchased £250,000 (nominal value) of gilts paying interest at the rate of 3% for
£300,000. Interest is paid half-yearly on 30 June and 31 December based on the nominal value. Petula sold
the gilts on 31 October 2016 for £302,500 (including accrued interest).
Required:
(a) Calculate Petula’s taxable income for the tax year 2016–17.
Note: Your computation should list all of the items referred to in notes (1) to (9), indicating with the use of
zero (0) any items which are not taxable or deductible. (12 marks)
(b) Advise Petula of the total amount of her unused pension annual allowances which are available to carry
forward to the tax year 2017–18.