Kaplan W/B Things I get wrong

Question 1

Fuel benefit.

Employee makes contribution for private fuel - how to calculate BIK?

Answer 1

Trick q.

If employer provides ANY fuel then it’s the whiole amount using the 24,500 base.

Only if employee reimburses ALL private fuel (or pays for it themselves in the first place) can they escape that base.

Question 2

what about car running costs?

repairs, insurance, servicing & road tax

Answer 2

These are included in the car benefit % calc.
(exceptions are private fuel & chauffeur)

If employee paid these expenses privately they can deduct that amount from their taxable car benefit

Question 3

car accessories threshold

Answer 3

100

Question 4

3 things about pool cars

Answer 4

Not used by just one employee

Not garaged at home

Used only for business travel

Question 5

21 yosef

Job related accommodation?

Ancillary items? Furniture, electricity?

Answer 5

No base or additional value charge.

Ancillary items create a BIK … but capped at 10% salary

Question 6

21 Yosef

Buying an item previously on loan?

Answer 6

HIGHER of

1. MV of asset at Date of transfer less price paid by employee.
2. Original MV when first supplied to employee less amounts taxed as benefit , less price paid by employee

Question 7

22 Loach

Calculating benefit for accommodation… use MV when employee first moved in or original price?

what about capital improvements?

Answer 7

If less than 6 years use Original price (plus any cap imp)

If more than 6 years its MV when employee moves in

Question 8

29 jadeja

Incidental overnight expenses .. if go above threshold (£5/£10) what is the benefit?

Staff party - £150 threeshold?

Answer 8

Go over £5 or £10 & The whole amount is a benefit not the excess

Same with staff party.
1 party £160 (£160 benefit)
1 party £50 & 1 party £90 (no benefit)
1 party £50 & 1 party £110 (choose the £50 as benefit)
(nb. the benefit is the whole £50 and not the £10 exess)

Question 9

30 dhoni

Long service award

Answer 9

For employees with at least 20 years’ service and no previous award in the last 10 years

Up to £50 VALUE p/y must not be cash.

If value is higher the benefit is the EXCESS

Question 10

33. googoosh

property income - what if there is a 12m lease @ 600 p/m on 3rd

what if replace something with more expensive version?

or cheaper version?

Answer 10

Ignore the fact its a 12m lease in this example - the answer was just the number of payments that would hit the bank on due date in the tax year.

Only expense the portion that could be described as replacing the original… also deduct any sale amount of the old item.

Just use the replacement item cost minus any sale amount for the old item… Do NOT try and offset the deduction of items value..

Question 11

34 sunita

Rent on accruals basis.

Answer 11

Work out rent due for the months tenents live there.
Deduct any non-paid rent due (allowed to put net)

IF owner used the property:
Time apportion any expenses that cannot be directly attributed to the let period. To exclude the period of private use (may be insurance for example)

NB only if owner used property - if it was empty but available for let then expenses are allowed.

Question 12

Interest from Gilts (Government stocks)

Taxable or exempt?

Answer 12

Taxable

Question 13

50 effie

How do amounts through:
* payroll giving
* Gift aid
affect taxable salary

Answer 13

payroll giving - this and company pension pmts are allowable deductions from employment income deduct net amount

Gift aid - do not deduct - it’s not an allowable deduction from employment income ..
tax relief is via changing the bands

Question 14

52 Maninder

When working out taxable salary how is a ‘round sum allowance’ part of which is for entertaining clients handled?

Answer 14

that part gets added to salary and is taxed (just add net amount paid)

taxed on the allowance less business expense EXCEPT entertaining clients

Question 15

How much can contribute to personal pension even if no earnings

Answer 15

3,600

Question 16

Tax relief on pension contributions made by an individual into a qualifying pension scheme is limited to the higher of 100% of their relevant UK earnings or £3,600 per annum.

Contributions are also limited by the Annual and Lifetime allowances.

Answer 16

.

Question 17

81 connected persons

A seems to a friend at less than market value?
What proceeds to use?

Answer 17

If it was ‘knowingly’ it should be MV

If it was accidentally it should be Actual

Question 18

84 jay and carli

Building 70k , repairs 10k , sell 120k
What is gain?

Answer 18

Sell minus bought price - do not include repairs …

I think exam will be clear if it’s a capital cost … eg extension added.
Another question used the word ‘improvement’ and this was deductible.

Beware repair!

Question 19

Shares are not chattels (not tangible, moveable goods)

…so the exemption for buy/sell below £6k doesn’t apply

Answer 19

.

Question 20

87 eshe

When calculating total chargeable gain for several items and there is a loss what trick might AAT be testing?

Answer 20

That if that item is a loss it shouldn’t be deducted from the other gains because it can only be offset against a gain to the same connected person

Question 21

91 chattels

For an item bought £5,900 with costs £200 and sold for £8k

It appears the chattel marginal gain doesn’t apply because the cost is more than £6k … ie Kaplan indicates you use the total cost

Answer 21

Maybe check this

Question 22

92 cgt

Note that for the £6k exemption it is ‘cost and sale proceeds Less than OR EQUAL TO £6k …

Answer 22

.

Question 23

A decoration for valour

Is it chargeable or exempt from cgt

Answer 23

Exempt if not purchased (eg inherited)

Question 24

For share pool questions. use format:
2 sections with headings

“Working: Share pool”

Column 1: date
Column 2: Narrative and calc used eg. “Purchase (8,000 x £8)”
Column 3: number of shares
Column 4: cost

For the cgt bit give a separate header eg
“chargeable gain calc 2020/21”
“Proceeds (5,000 x £10) ...... £50,000”
“Less: Cost (W)..... £20,833”
“Chargeable gain .....£29,167”

Answer 24

.

Question 25

Need to learn cgt due dates

Answer 25

.

Question 26

Cgt on res prop.

Can the 3 years for any reason be used if don’t return to property.
(Is it just the working uk and abroad allowances that need that)

Answer 26

No ….. Must return to the property to get this…

Actually it seems occupation after absence for the 2 work allowances is not ‘insisted’ on if the person cannot return due to being moved elsewhere for work

Question 27

Remember if someone gifts a house before they die they lose the rnrb unless have another house

Answer 27

.

Question 28

IHT due in respect of residue of a death estate is paid by the residuary legatee?

Answer 28

No it is ‘suffered’ by the residuary legatee but ‘paid’ by the personal representatives

A personal representative is the person, or it may be more than one person, who is legally entitled to administer the estate of the person who has died (referred to as ‘the deceased’). The term ‘personal representatives’, sometimes abbreviated to PR, is used because it includes both executors and administrators.

Question 29

MA Q’s

T3 calculating loan benefit
I thought we were only supposed to use average method but this was a £22K loan @ 1.5% for last 3m of tax year and the answer was:

The amount of loan * 0.75% * 3/12

Answer 29

.

Question 30

MA Q’s

Is the number of kids or the cost of the service relevant when dealing with provision of childcare in the workplace

Answer 30

No it’s exempt regardless. (must be avail to all

Childcare vouchers are different (I dont think will be tested - believe closed now anyway to new)

Employers could provide for free but more likely salary sacrifice so you just save the NI & income tax

There are also limits to the voucher amounts depending (to even out the actual relief across texpayers)

Rate W exempt limit M exempt limit
Basic £55 £243
Higher £28 £124
Addit. £25 £110

Question 31

If not sure about a benefit one thing to think of is whether it is available to ALL employees

Answer 31

eg provision of bicycle or safety equip like helmet that is only available to employees earning less than 20K

This would NOT be exempt