Question no.2:

Mona is a UK resident working as an employee in a UK company. During the tax year 2021/22, she received a Salary of 80,000 and a bonus of 8,000. Also, she received a House Rent Allowance of 8,000 and a Transport Allowance of 10,000.

For the next tax year (2022/23), the Employer has provided the option to Mona to go for Accommodation instead of House rent allowance and Motor car instead of Transport Allowance. She is eligible to go for the accommodation, its annual value will be 6,000 and the cost of the house is 120,000. If she opts for the car, then she will get a petrol car costing 25,000 (list price of 30,000), CO2 emission of 124 gms/km. Also, she will get fuel benefits from the employer.

You are required to advise Mona whether to accept a Car and Accommodation from the employer. You have to substantiate your answer with a supporting calculation with tax savings.

To answer this question, assume the tax rate and allowances of 2021/22 will be applicable for 2022/23. (300-400 words) (5 marks)