QUESTION TWOJames Nkhata, has been employed as an electrical engineer at Lombe Pic for many years. On$1$ May $2022,$ he started running a business which deals in electrical appliances generating annual tumover which is above K$800,000.$ He prepared the first accounts to $31$ March $2023,$ and has decided to be preparing accounts annually thereafter. The final taxable profits for the first two periods of trading are as follows:Period ended $31$ March $2023$Year ended $31$ March $2024($forecast$)$K$40,000150,000$On $31$ January $2023,$ Nkhata decided to take early retirement from employment. At the time of retirement, he was entitled to an annual basic salary of K$720,000$ payable on $25$ of each month, and he was also entitled to housing allowance of $25\%$ of the basic salary and a mileage allowance of $5\%$ of the basic salary.On $16$ December $2022,$ Lombe Pic had declared a performance bonus for all employees payable on $31$ December $2022.$ However, due to liquidity problems, the bonus was only paid on $31$ January $2023.$ On the same date, James Nkhata was also paid his early retirement package comprising a lumpsum pension of K$8$ million, repatration pay of K$20,000$ and leave pay of K$75,000.$ PAYE deducted from his employment income was K$35,640.$James Nkhata used his own personal motor car partly for employment purpose. He bought the car on $6$ July $2022$ at a cost of K$400,000.$ During the month of January $2023,$ he travelled a total of $1,500$ kilometres in the car out of which, $900$ Kilometres were for employment purposes. He incurred motor car running expenses totalling K$3,000$ in the month of January $2023.$Other Income$00$In the tax year $2023,$ NKhata generated the following additional income:RoyaltiesGRZ bond interestDividends from a LuSE listed companyConsultancy feesK$35,19024,00030,00034,000$The above amounts represent the actual cash received. Withholding tax had been deducted and paid at source where appropriate.

Required:

$($a$)$ Explain how the basis period for the first two $(2)$ periods of trading will be determined and state the tax years in which profits he made in each period will be assessed.

$(4$ marks$)$

$($b$)$ Compute the amount of the final income tax payable by James Nkhata for the charge year $2023.$ You should indicate by the use of zero $(0)$ for all employment benefits that are exempted from tax.

$(16$ marks$)$

$[$Total: $20$ Marks$]$