On 6th April 2021, Dennis started a new job employed as a Marketing Manager with Avocado Limited at an annual salary of £140,000 from which £41,000 has been deducted under PAYE.

The company had a bonus scheme and Dennis received in addition to his salary a bonus of £10,000 on 1st January 2022 and £11,500 on 1st January 2023.

He was provided with the use of a petrol-powered motor car with a CO2 emission of 112 grams per kilometre. The car had a list price of £20,000 but cost the company £18,000 as a discount of £2,000 was negotiated, Avocado Limited paid all the running cost of the car including private petrol and provided Dennis with a free car parking space at work. Parking would otherwise have cost him £300 for the 12-month period to 5th April 2022.

For the year 6th April 2021 to 5th April 2022, he lived in a company house that cost £200,000 in June 2013 and had a market value of £450,000 on 6th April 2021. Improvements costing £11,000 were carried out in December 2021. The property which was not job-related had an annual value of £8,000 and was furnished at a cost of £18,000.

The company contributed £8,000 into the company’s occupational scheme on Dennis’s behalf. Dennis contributed £5,000.

Dennis paid an annual professional subscription of £396 to the Institute of Marketing and £600 to a tennis club so that he could entertain Avocado’s clients.

Dennis has also provided you with the following information for 2021/22
£

Bank interest received
Dividends received from UK companies Gain on a buy to let property
Individual Savings Account (ISA) interest

Cash amount paid to a national charity, not under gift aid REQUIRED

1,100 10,000 6,000 300

250

a) Calculate Dennis’ employment income for 2021/2022 clearly showing your workings. 

b) Calculate Dennis’ income tax payable for 2020/21.

Answer rating: 100% (QA)

a working 140 000 10 000 11 500 161 500 EX PL AN ATION D ennis s employm... View the full answer