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Hi Sir
about ACCA june 2014Throughout the tax year 2013–14, Prog plc provided Richard with living accommodation.
The property has been rented by Prog plc since 6 April 2013 at a cost of £1,100 per month.
On 6 April 2013, the market value of the property was £122,000, and it has an annual value of £8,600.
On 6 April 2013, Prog plc purchased furniture for the property at a cost of £12,100. The company pays for the
running costs relating to the property, and for the tax year 2013–14 these amounted to £3,700.what I did to find the income,
8 600 +((122000 – 75000 – 3700) * 4 %) but the result is different, I don’t know why. Sir I watched your lecture several times, I thought it’s time for revision. I don’t know why i’m still confuse sometime.
The living accommodation is being RENTED by the company it has NOT been purchased by the company! Therefore the benefit is simply the higher of the annual value or the rent paid by the company. The annual value plus expensive accommodation benefit is only used when the property was purchased by the company.
In addition the running costs paid by the employer are a further benefit (these would never go into the expensive accommodation benefit calculation in the way that you have shown.
We then also include the benefit of the use of the furniture applying the normal 20% rule for other assets made available for private use.
Your problem is not recognising correctly the tax issue being tested.
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