Brenda is a self-employed Engineer. She is also a director of Brick & Mortar Ltd. The following information is available for the tax year 2021/22: Self-employment 

1. Brenda's statement of profit and loss for the year ended 31 December 2021 is as follows: Note £ £ Revenue 2 382,784 Expenses: Gifts and donations 3 10,416 Lease of motor car 4 5,214 Professional fees 5 3,888 Property expenses 6 55,488 Travel expenses 7 20,124 Other expenses 8 79,692 (174,822) Net profit 207,962
2. Revenue includes £3,500 received during June in respect of an impairment loss that Brenda had written off when calculating her trading profit for the year ended 31 December 2020.
3. Gifts and donations are as follows: £ Gifts to customers (engineered clocks costing £110 each and displaying Brenda's name) 3,960 Gifts to customers (bottles of beer costing £40 each and displaying Breda's name) 2,976 Donations to political parties 3,480 10,416
4. The lease commenced on 1 May 2021 and is in respect of a motor car with CO² emissions of 120 grams per kilometer. There is no private use of the motor car.  
5. The figure of £2,550 for professional fees is in respect of accountancy services, of which £700 is for inheritance tax planning advice.
6. Brenda lives in an apartment that is situated above her office, and two-fifths of the total property expenses of £55,488 relate to this apartment.
7. The figure of £20,124 for travel expenses includes £720 for parking fines incurred by Brenda.
8. The figure for other expenses of £79,692 includes £870 for Brenda's professional subscription to the Engineering Society, and £860 for her golf club membership fee. Director's remuneration
9. Brenda will be paid gross director's remuneration of £41,500 by Brick & Mortar Ltd during the tax year 2021/22.
10. In addition to her director's remuneration, Brenda received two bonus payments of £7,000 from Brick & Mortar Ltd during June 2021, both of which were in respect of the year ended 31 December 2021. Brenda became entitled to the first 3 bonus payment of £7,000 on 20 March 2021, and to the second bonus payment of £7,000 on 25 April 2021.
11. Brick & Mortar Ltd deducts PAYE at a flat rate of 45% from all Brenda's earnings. Other information
12. During the tax year 2021/22 Brenda will receive dividends of £10,000 and interest of £7,200 on the maturity of a saving certificate issued by National Savings & Investments (NS&I).
13. Brenda owned £150,000 3% Treasury Stock (gilts) which pay interest on 30 June and 31 December each year. She sold the Treasury Stock on 31 December 2021 including interest.
14. On 1 November 2021 Brenda made a gross gift aid donation of £7,500.

(a) Calculate Brenda's tax adjusted trading profit for the year ended 31 December 2021. Note: Your computation should commence with the net profit figure of £173,302
(b) Calculate the income tax payable by Brenda for the tax year 2021/22.

Answer rating: 100% (QA)

Lets break down Brendas tax adjusted trading profit and income tax calculation a Tax Adjusted Tradin... View the full answer