Tx notes fa22 Final

June 2023 to March 2024 exams
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16. Renner 
Income tax computation - 2022/23
Workings:
(W1) Employment income: 
Non-
savings Dividends
Total
£
£
£
Employment income (W1)
55,870
55,870
Dividend income (20,000 
×
40p)
8,000
8,000
Total Income
55,870
8,000
63,870
Less PA
(12,570)
(12,570)
Taxable income
43,300
8,000
51,300
Income
tax:
£
£
Basic rate:
Non savings
37,700 @ 20%
7,540
Higher rate:
Non-savings
5,600 @ 40%
2,240
Dividends
2,000 @ 0%
0
6,000 @ 33.75%
2,025
Income tax liability
11,805
Salary
(8/12 
×
£28,500)
19,000
(4/12 
×
£33,000)
11,000
30,000
Bonus (February 2023)
4,200
Benefits (W2)
22,570
56,770
Less: Occupational pension contributions (3% 
×
£30,000)
(900)
Employment income
55,870

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336
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(W2) Benefits: 
(W3)
Mini - Car and fuel benefits
CO
2
emissions = 145g/km (rounded down to the nearest 5g/km)
Petrol engine
Appropriate percentage
= 15% + ((145 - 55) = 90/5 = 18%)
= 33%
(a)
Use of yacht (Two weeks use only)
Annual value: 20% x (MV when first available)
(20% 
×
£42,000 
×
2/52)
323
Running expenses (£6,000 
×
2/52)
231
554
(b) Private medical insurance - Cost to employer
270
(c)
Subsidised canteen - Exempt benefit
-
(e)
Car scale charges:
Pool car - exempt benefit
–
Mini (W3) - car benefit
8,745
Mini (W3) - fuel benefit
8,349
(f)
Employer’s contribution into pension - Exempt benefit
-
(g) Beneficial loan £20,000 
×
(2% – 1.75%)
50
(h)
Use of computer equipment
MV when first provided: Use of asset (20% x £2,010)
402
(i)
Living accommodation:
Annual value for ten months
900
Additional charge for expensive accommodation:
[(£138,000 – £75,000) 
×
2% 
×
10/12]
1,050
Council tax
550
Electricity
260
Telephone
110
Cleaning
130
Use of furniture (20% 
×
£7,200 
×
10/12)
1,200
4,200
Total assessable benefits
22,570
Car benefit
(33% 
×
£26,500)
£8,745
Fuel benefit
(33% 
×
£25,300)
£8,349

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17. George 
(a)
The maximum allowable contribution that George may make into his pension scheme, subject 
to his earnings level for a year is his annual allowance limit of £40,000 for 2022/23 plus any 
unused allowance brought forward from the previous 3 years. For this purpose we compare the 
gross amount of contributions made in the year with annual limits of £40,000 for each tax year 
so long as he was a member of a pension scheme for the tax year in question.
His payment of £48,000 will represent a gross pension contribution of £60,000 (48,000 x 
100/80). As this exceeds the annual allowance of £40,000 for 2022/23 he will now be able to 
use any unused allowance brought forward from the previous 3 years on a FIFO basis i.e. 
2019/20, 2020/21 and 2021/22.