• Fiona who is domiciled and resident in UK, from 6 April 2020 will be receiving a greatly enhanced salary (see note 1) and employee benefits (paid by her employer) in her new position and now would like to know how much tax she will have to pay in the current tax year

• In addition to her salary, Fiona was paid a bonus of £15,000 on 12th May 2020. She had become entitled to this bonus on 22 March 2020

• Has recently received a major promotion at work and she will now be the Financial Controller for her employer, Rambo plc, a listed company.

• Entitled to the basic personal allowance of £12,500 and she contributed 5% of her monthly gross salary into Rambo’s HMRC registered occupational pension scheme

• Fiona’s husband Christian is unemployed, therefore he agreed to transfer ‘Marriage allowance’ to Fiona for income tax purposes.

• Fiona’s also has other income as detailed below.

Fiona also makes charitable donations (which qualify as gift aid) to the RSPCA. The net value of these donations is equal to 3% of her gross salary.

The proposed package of benefits is as follows:

1. Fiona will also have use of a company accommodation (see note 2)

2. Car – her own choice up to the value of £25,000 (see note 3)

3. Unlimited fuel for car

4. Access to a Music system for home use (see note 4)

Other Income

In the tax year 2020/2021 Fiona also received interest on her building society account equal to 4% of her gross salary.

In addition to this she has a portfolio of investments and in the tax year 2020/2021 she received dividend income equal to 10% of her gross salary.

Note 1

Use your date of birth to work out her salary to the nearest £.

Simply reverse your date of birth and divide by ten to get Fiona’s annual salary.

E.g., a date of birth of 22 August 1991 (22/08/91) produces a salary of £91,082. (910822/10)

Note 2

Fiona moved into the company accommodation in London on 6 May 2018. The property was purchased by her employer in 2011 for £180,000 and the company had spent £31,000 in August 2020 on improvements to the property. The Market value as at 6th May 2019 was £ 250,000

The property currently had a market value of £275,000 and has a rateable value of £11,600. The company provided all the furniture at a cost of £45,000, Fiona is required to pay all the utility bills for the property.

Note 3

Choose a car (your personal preference) from the web for Fiona’s new vehicle. Give full details of make, model, list price, type of engine and CO2 emission. Get a screenshot of the car details from the website you used and attach in the coursework as an appendix.

Note 4

On 6 July 2019 the company lent Fiona a Music system costing £5,000 for her private use. On 31th March 2021 the market value of the system was £ 3000. Fiona paid £ 2000 to her employer and became the owner of that music system on 31 March 2021.

REQUIRED:

Write a report with detailed explanation of Fiona’s income tax payable and her NICs for 2019/2021.

You must clearly show all the relevant calculations in detail, added as supporting documents for your report. Your calculation should be set out in a way that Fiona (not a tax expert) can easily understand.

Answer rating: 100% (QA)

201920 Income from employment 91082 Interest from savings 3643 Dividend income 9108 Total income 104... View the full answer