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November 14, 2021 at 9:17 pm #640644khalmly
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Your accountancy practice has been approached by Megan Jones to advise her on her tax position for the year ended 5 April 2022 (2021/22). She has provided the following details of her income and benefits.
Megan was head hunted to join a research organisation on 6th August 2021.
Her remuneration package was as follows:
Salary: £6,000 per month since joining the company. She pays 5% of her salary into the company pension scheme. Her employer also contributes 7.5% of her salary into the pension scheme.
Megan was rewarded for her hard work and she got a one off bonus of £5,000 in December 2021.
Living accommodation: She is provided with the use of the company flat, for which the company paid £550,000 in 2017. The flat has an annual value of £7,000.
In June 2019 improvements were made to the flat costing £18,000.
The running cost to the company is £6,000 for 2021/2022. Megan makes monthly contribution of £250 towards the running cost of the flat. The company has also furnished the flat at the cost of £12,000.
Loan: Her employer also lent Megan £14,000 at an interest rate of 1% per annum when she joined the company. Megan repaid £5000 in January 2022
Mobile Phone: She is provided with a mobile phone and is allowed to use it for both private and business calls. The company paid all charges of £520 during the year, £130 of which related to private calls.
Car and Fuel Payment: Megan used her own car for business travel till 6 October 2021, at which point she was provided with a company car. During this period she travelled 15,000 miles on company business in her own car.
The car provided to Megan had a list price of £50,550, and a carbon dioxide emission rating of 146g/km. The company paid all the running costs of the car, including fuel.
Megan contributed £100 per month towards the use of the car which includes £30 towards some of the petrol.
Private Medical insurance: The Company paid £1,000 for her Private medical insurance.
Gym Membership: The Company paid the monthly £100 fee which she joined when she started her job.
Megan’s other income for 2021/2022 consisted of gross pay from her previous employer of £20,000 on which PAYE tax of £3,500 was deducted. Her current employer deducted total PAYE of £20,000. She also earns interest of £500 from her Cash ISA account and has dividend income for the tax year of £3,250.
Megan’s parents who are in their early 80’s are fairly fit. Her father a keen landscape gardener still does some designing for selected clients. Her mother is retired and both her parents gets the basic state pension.
You have been asked by your firm to write to Megan covering the following:
a. Calculate Megan’s taxable income for tax year ended 5th April 2022.
b. Calculate Megan’s tax payable for the tax year ended 5th April 2022.
c. Explain to Megan as to the changes she should make to save tax
d. Explain to Megan the conditions she would have to meet, if she decided to work on self-employed basis.
e. Explain to Megan how Married Couple Allowance would operate in the circumstances of
her parentsNovember 17, 2021 at 11:25 am #640864Tax Tutor
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There are more than sufficient questions with answers for you to practise, both in the OT notes and more specifically in the Revision Kits supplied by the ACCA approved providers dealing with these subject areas and all the other areas of the syllabus.
You should not be attempting questions that have no answers – unless of course you have been set this as a homework question in which case you need to answer it as best you can and then review the answer when your tutor supplies it.
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