Reedha started a new job on 6 April 2021, working as a consultant with Richmond PLC. The following information is available for the 2021-22 tax year. Reedha received an annual salary of £67,000 for the 2021-22 tax year. She contributed £5,000 to an HMRC-approved occupational pension scheme. For 2021-22, tax year Richmond PLC deducted £18,000 in PAYE from Reedha’s earnings. In August 2021, Richmond PLC provided Reedha £11,000 to cover removal expenses. On 1 July 2021, Richmond PLC provided her with an interest-free loan of £20,000. Reedha had repaid 8,000 of the loan by 1 January 2022. Richmond PLC pays Reedha’s annual subscription of £1,000 to a private medical insurance scheme. During the period from 1 August 2021 to 5 April 2022, Reedha ate free meals in Richmond PLC’s staff canteen. The total cost of these meals to the company was £1,000. The canteen is available to all the company’s employees. Richmond PLC provided Reedha with a diesel-powered car for the period 6 July 2021 to 5 April 2022. The car had an official CO2 emission rate of 172 grams per kilometer. The car had a list price of £25,200 and cost Richmond PLC £25,000. Richmond PLC pays the fuel costs for Reedha’s private journeys. (The car was registered before 6th April 2020) From 6 April 2021, Richmond PLC provided Reedha with the use of the house, which has an annual value of £8,300. 

(i) The employer bought the house in 2018 at a cost of £280,000 and spent £35,000 on improvements in January 2021. A further £20,000 was spent on improvements in August 2021. 

(ii) Reedha pays £300 per month for this accommodation. During the 2021-22 tax year, Reedha received cash amounts from the building society: interest of £18,500 and dividends of £14,000. She received £800 debenture loan interest (Net). On 2 October 2021,Reedha received a premium bond prize of £100.

Reedha made Gift Aid donations of a net of £8,000 to a national registered charity during the 2021-22 tax year.

Note: The official rate of interest agreed by HMRC is 2.25%.

Required:

1. Calculate the income tax payable by Reedha for the tax year 2021-22. 
2. Calculate class 1A national insurance payable by Richmond Plc?

Note: you should indicate by the use of zero any items that are non-taxable/exempt for tax purposes.

Answer rating: 100% (QA)

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