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Dear tutor,
Please help to clarify something as I find the language a little confusing.
By assessable benefit does that mean it will be included and assessed to derive at final taxable amount (not deducted)?
Also with expenses – lighting etc
Notes state – taxable if paid by employer therefore we do not deduct from final taxable amount?
In lecture you explain that if employee pays it assessable and taxable, does this also not mean that it is not deducted from final amount?
Sorry I just found it confusing
Thank you
Hi,
Sorry I am still a little confused.
Please clarify what the difference is between Exempt benefits (list you have kindly provided) and taxable benefits – Are they both assessable and taxable?
Many thanks
Sorry me again,
At one point I thought you explained Exempt benefits were assessable.
In removal expenses example you say £10k , only £8k is non assessable and £2k is assessable.
So by Exempt benefits – do you mean they are exempt from being included in the taxable income calculation?
I think an example including some of these benefits may have aided my understanding?
Right now as you can tell I am extremely confused
Many thanks
Ok I have been on HMRC website and it says states:
“You do not have to pay tax on benefits and expenses covered by concessions or exemptions. If the concessions or exemptions apply to you, do not enter the benefits and expenses concerned on your tax return.”
Please confirm if this means that all the examples given in your list DO NOT TAX?
Deductible expenses = Reduction in our taxable income
Exemption benefits = Are just excluded from the taxable income, therefore neither increase or reduce
Taxable benefits = Increase our taxable income
Please confirm if I have now understood correctly?
Many thanks
Many questions and much confusion indeed – the names taxable / assessable benefit and exempt benefit provided by an employer should be self explanatory – taxable / assessable benefits will be included in the taxable income of the taxpayer and exempt benefits will not.
Sometimes a benefit will be part exempt and part taxable, for example the first £8,000 of removal expenses paid by the employer when the employee is required to move his / her place of work is exempt, so that if the company pays £10,000 in such expenses, a taxable benefit of £2,000 will arise.
When dealing with expenses you must be careful to distinguish between expenses paid by the employee and those paid on behalf of an employee by the employer.
If expenses are paid by the employee it must be determined whether they represent allowable deductions from employment income (expenses incurred wholly, exclusively and necessarily in the performance of the duties of employment).
If expenses are paid by an employer on behalf of an employee then it must be determined whether this represents an assessable benefit as with the removal expenses above.
I would strongly suggest that you do not refer to HMRC website but if the notes and lectures are insufficient for you then you purchase a study manual as well as an exam kit from an ACCA approved provider which is specifically prepared for the F6 syllabus.
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