Outcome 3 class test solutions
1a. calculate Taxable income :
Salary 50,000
Benefits in kind
- accommodation- annual value 6,000
-other benefits (90,000-75,000)*4%= 600
-car benefit 14,500*23% = 3335
-fuel benefit 18,800*23% = 4324
Total benefits 14,259
Total earnings 64,259
Subscription to marketing institute (150)
Pension contribution 9,360/0.8 (11,700)
Personal allowance (7,475)
Total taxable income 44,934
1b. Class 1 NIC
Eileen’s total earnings from employment is 64,259
Eileen her employer
Earnings rate amount rate amount
First 7225 0% nil 0% nil
Next35,250(42,475-7225) 12% 4,230 13.8% 4864.5
Remaining 21,784(64,259-42,475) 2% 435.68 13.8% 3006.19
Total (per year) 4665.68 7870.69
Class 1A NIC (will be payable by Eileen’s employer)
13.8% * 14,259= 1967.74
1c. Tax liability (2011/12)
Eileen’s taxable income is 44,934, which is greater than 35,000, so she is higher tax payer.
Basic rate 20% * 35,000= 7,000
Higher rate 40%* (44,934 – 35,000) = 3973.6
Total tax liability 10,973.6
Q2a.
Taxable income: salary, bonus, benefits in kind (car benefit, fuel benefit, beneficial loan, home entertainment system)
Non-taxable income: winning in a casino, child benefit, parking voucher
Exempt benefits: mobile phone
Allowable expense: annual subscription to...