Jack is a UK (non-Scottish) taxpayer who earned a basic salary of £100,000 for tax year 2020-2021. The following information is available in relation to his employment:

1. Jack is entitled to an annual bonus which is based on his employer’s profits for the previous calendar year. Jack’s bonus for the year to 31^st December 2019 was £5,000 which he received on 10^th April 2020. Jack’s bonus for the year to 31^st December 2020 was £8,000 which he received on 10^th April 2021.
2. Throughout the tax year 2020-2021, Jack was supplied with a company car which was registered on 1^st January 2020 with a list price of £25,000. Optional accessories worth £4,000 were fitted to the car before it was made available to Jack. The car has an official CO₂ emission rate of 172g/km and private fuel (petrol) is supplied. Jack contributed £2,500 towards his private fuel.
3. Throughout the tax year, Jack enjoyed subsidised lunches in the staff canteen which is available to all employees. Jack’s employer estimates that this subsidy costs, on average, £1,200 per year per employee.
4. During the tax year, Jack’s employer paid Jack’s gym membership of £1,000.
5. On the 6^th June 2020, Jack’s employer provided Jack with an interest free loan of £50,000. Jack repaid £10,000 on 1^st January 2021 and £10,000 on 1 March 2021. The official rate of interest is 2.25%.
6. On the 6^th July 2020, Jack’s employer purchased computer equipment for Jack’s private use costing £2,000.
7. Also, during the tax year 2020-2021:
   • Jack won £25,000 on the national lottery
   • Jack received £500 interest from his individual savings account (ISA)
   • Jack received £500 interest from his building society accounts.

Required:

Calculate Jack’s income tax liability for tax year 2020-2021 explaining fully the treatment of each item listed above.

Answer rating: 100% (QA)

Computation of Income Tax Liability of Mr Jack For Assessement Year 20202021 Particular Amount Salar... View the full answer