[Mohamed]

Result: Pass
Mark: 95

Is it out of 100, just to be sure?

[Mohamed]

<cite> @helloitsroshan said:</cite>
Thanks for the reply

How much did you extend your band rate by 40k or 50k. if you extend by 50k , we have to tax the extra 10k which is over the annual allowance ( gross)?/

I wasn’t too sure about this. I went with grossing it up, as I had been so used to it when doing past questions. Is the 50K a year pension limit a net or gross limit? I assumed it must have been a net limit. But thinking of it now, it was probably 40K that we needed to extend the band by.

[Mohamed]

<cite> @helloitsroshan said:</cite>
Excellent , could you confirm whether the car wasn’t available for whole period? i don remeber apportioning it?

Yeh, car and fuel benefit were for part of the year. 5 months I think, cant remember. He also got AMAP from his employer for the first few months for using his private car, so that was a big hint there that you had to apportion the car and fuel benefit.

[Mohamed]

Here are the answers I put down

1) % for the car was 32%. Apportioned the car and fuel benefit for the part of the year where the car/petrol was provided.
AMAP wouldn’t have been claimable to travel from home to work, but allowed for the other 2. Minus what was given to him, to the AMAP to get a benefit.
Loan benefit- loan outstanding at start of year plus loan outstanding at the end of year, divided by 2, times ORI. Minus the actual interest that he paid, giving the loan benefit.
Occupational pension deducted from Gross Salary.
Personal pension he would be able to invest in- 10,000 for the 3 years b/f and 10,000 for the current year. Thus, Basic Rate Band extended 40,000 times 100/80.
No Personal Allowance available as ANI was over 116,000
Holiday letting treated as property income.

NIC 1 A on loan, car fuel and AMAP benefit.

10% starting rate for Rhoda, and reduction in her Personal Age Allowance as her Net Income is more than 25400.

2) Balancing charge on the special pool,
One of the car was eligible for FYA.
3 associates (4 including the parent)
Group Loss relief of 64000 was the only one they could claim.
Dividends from the company that they had a 40% stake in, included as FII at * (100/90)
Tax was in the marginal rate

VAT output of 300/6= 500
Impaired debt (wasn’t too sure on this), was recoverable as it was exactly 6 months since payment was due?
Had to subtract UK customer entertainment from input VAT figure.
No adjustment for overseas customer entertainment, repairs, etc?

3 a) 6625 shares

b) No Rollover relief on warehouse 1 as sale proceeds greatly higher than re-investment
Some rollover relief on warehouse 2, and some gain (proceeds that werent reinvested)

c) Enterpreneur relief for one of the persons, so 10% for him, and 28% for the other. 2000 shares valued at 2000 pounds for the first person, and cost of shares for the second person was 2000/3000*acquisition cost
Tax saving was around 3000-4000ish pounds.

4) a) first yr assesment for 11 months till 31st march. this was also overlap profits, other years CYB
Final 14 months period, WDA given for 18%*14/12.
Overlap Profits of 2 months deducted to bring the taxable months to 12.

b) 2 CAPs. The first for 12 months, than for 2 months. WDA and AIA for the 2 months proportionally reduced.

5) Reduce gift of house by Annual exemption of 2 years (6000 pounds) plus marriage exemption of 5000 pounds. This gives the Gross chargeable transfer. Death tax on PET would be GCT less NRB of 325,000. IHT @ 40% and taper relief @ 60 %.
Half of the death estate was exempt, the other half chargeable at 40%.
ii) Tax on house payable by son

c) Income tax on rents (less repairs, less insurance)
CGT on proceeds less legal fees, the value of house when inherited and capital expenditure.

Anyone else got something similar? Any feedback would be appreciates .

[Mohamed]

How did everyone find the last part of question 5? It seemed almost too easy. 7 marks for Income Tax having to be calculated on rents less insurance and repairs, and captial gains tax on sell of house less probate value and capital enhancements?

[Mohamed]

<cite> @hufckinger said:</cite>
I think that we had to find the liability – this was roughy:

Pension 8000
Interest (received GROSS) 21600
Less PA: (10500)
2710 @ 10%
remainder at 20%

There should not have been a repayment.

Shouldn’t the Personal Age Allowance have been reduced as Net Income was over 25400?

[Mohamed]

The question on the change of accounting date, am I right in saying that we had to subtract 2 months of overlap profits (2/11) from the long accounting period to bring it down to 12 months?

Question 3A, I got 6625 shares. (6.40-2.40)= 4, from this 1.6 was an excess gain, thus 10,600/1.6? Anyone get this?

[Author]

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