Sally runs her own business selling toys and makes up accounts to 31 March each year....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sally runs her own business selling toys and makes up accounts to 31 March each year. For several years her business profit as adjusted for tax purposes has been £80,000 per annum. Sally has been approached by one of her competitors, Largos Ltd, and they have offered her a contract of employment. Sally is considering closing down her sole traders' business and becoming an employee of Largos Ltd in the current tax year. The remuneration package offered by Largos Ltd consists of a competitive salary of £75,000 and a comprehensive benefits package including a company car with a taxable benefit amounting to £5,000. If she accepts the job, the following year Largos Ltd will be offering Sally the following additional benefits: ● A choice of meals in the company canteen (open to all staff free of charge) or food vouchers worth £7.50 per day. A choice of a free work place parking space or a contribution of £10 per day towards the cost of train fares if she travels to work by train. An employee interest free loan is available. Sally is considering borrowing £11,000 to buy a new kitchen or taking a smaller loan. Sally is uncertain whether she should accept the job offer from Largos Ltd and has asked you for advice. Requirement: a) Calculate any change in the Income Tax liability or National Insurance Contributions payable by Sally if she becomes an employee and explain how the way in which Sally pays her taxes will change. (7 marks) b) In respect of the additional future benefits advise Sally of the most tax efficient options. Sally runs her own business selling toys and makes up accounts to 31 March each year. For several years her business profit as adjusted for tax purposes has been £80,000 per annum. Sally has been approached by one of her competitors, Largos Ltd, and they have offered her a contract of employment. Sally is considering closing down her sole traders' business and becoming an employee of Largos Ltd in the current tax year. The remuneration package offered by Largos Ltd consists of a competitive salary of £75,000 and a comprehensive benefits package including a company car with a taxable benefit amounting to £5,000. If she accepts the job, the following year Largos Ltd will be offering Sally the following additional benefits: ● A choice of meals in the company canteen (open to all staff free of charge) or food vouchers worth £7.50 per day. A choice of a free work place parking space or a contribution of £10 per day towards the cost of train fares if she travels to work by train. An employee interest free loan is available. Sally is considering borrowing £11,000 to buy a new kitchen or taking a smaller loan. Sally is uncertain whether she should accept the job offer from Largos Ltd and has asked you for advice. Requirement: a) Calculate any change in the Income Tax liability or National Insurance Contributions payable by Sally if she becomes an employee and explain how the way in which Sally pays her taxes will change. (7 marks) b) In respect of the additional future benefits advise Sally of the most tax efficient options.
Expert Answer:
Answer rating: 100% (QA)
A Assuming sallys only source income is her salary from Largos Ltd her income tax liability and NICs will be as follows Salary75000 Taxable benefit of ... View the full answer
Related Book For
Canadian Income Taxation Planning And Decision Making
ISBN: 9781259094330
17th Edition 2014-2015 Version
Authors: Joan Kitunen, William Buckwold
Posted Date:
Students also viewed these accounting questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
i. Find a. b. ii. Use the trapezium rule with 2 intervals to estimate the value of giving your answer correct to 2 decimal places. +6 e2x + 6 e2 dx,
-
On March 19, 1997, Jairath, as seller, and Bletnitsky, as buyer, entered into a real estate contract for sale of an apartment building located at 930 Ontario in Oak Park, Illinois, for a price of...
-
Harem Company revealed a balance of P8,200,000 in the accounts receivable control at year-end. An analysis of the accounts receivable showed the following: Accounts known to be worthless 100,000...
-
Prepare residue-curve maps using a process simulation program for the following mixtures at \(1 \mathrm{~atm}\). Identify any distillation boundaries. (a) Acetone, n-heptane, toluene (b) Methanol,...
-
The following is a list of selected accounts and ending account balances taken from the books of the Adams Company on December 31, 2007: Account Title Amount Premium on preferred stock .......... $...
-
HR Competencies & Applications Setting up an Alternative Dispute Resolution Process Creating an internal process to settle employment-related disputes and conflicts can benefit both the organization...
-
In June 2017, BMW announced plans to spend $600 million to expand production at its South Carolina plant. The new investment would allow BMW to prepare for new X model SUVs. BMW apparently felt it...
-
DSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is Tk. 194,000. The cost of shipping and installation is an additional Tk.10,000. The...
-
Koyo, Inc. sold its 10% bonds with a maturity value of $7,000,000 on August 1, 20251 for $6,896,000, before paying $100,000 of bond issue costs. At the time of the sale the bonds had 5 years until...
-
Cathode ray tubes (CRTs) used in old-style televisions have been replaced by modern LCD and LED screens. Part of the CRT included a set of accelerating plates separated by a distance of about 1.38...
-
The Antarctic Circumpolar Current flows between the Palmer Peninsula (the northernmost part of the Antarctic) and the southern tip of South America at 2 m sec-1. If the flow is geostrophic, what is...
-
Discuss the design principles and implementation strategies behind fault tolerance mechanisms in operating systems, including redundancy, error detection, and error recovery techniques to ensure...
-
Consider the following information and determine how Smith & Company's audit report should be dated. Explain your answer: ABC Bank's balance sheet is dated December 31, 2019. On January 12, ABC's...
-
A group of technology students is interested in whether haptic feedback (forces and vibrations applied through a joystick) is helpful in navigating a simulated game environment they created. To...
-
What is taxable income, and what is the formula for determining taxable income?
-
To what extent, if any, should the vendor to be concerned about the tax status of the purchaser when contemplating the sale of a business?
-
In what circumstances are non-residents subject to Canadian income tax?
-
For the past 30 years, Janice Kalinsky has been the president and owner of JK Wholesale Ltd. In contemplation of retirement, she has entered into negotiations to sell the shares of JK to Kaplan...
-
The swinging spring is an example of a two degree-of-freedom system with a cubic nonlinearity. Indicate whether the statement presented is true or false. If true, state why. If false, rewrite the...
-
The period of free vibrations of a nonlinear system depends upon initial conditions. Indicate whether the statement presented is true or false. If true, state why. If false, rewrite the statement to...
-
A mass attached to a linear spring sliding on a surface with Coulomb damping is an example of a nonlinear system. Indicate whether the statement presented is true or false. If true, state why. If...
Study smarter with the SolutionInn App