Chapter 5 - Employment Income Flashcards
(14 cards)
Distinction between employment and self-employment?
Employment = Contract of services
Self Employment = Contract for services
Advantages of being Self-Employed
National Insurance - Lower rates of NIC are applied
PAYE - Self-employed can pay tax later under self assessment
Expenses - Less strict on the deductibility of expenses. (more allowable expenses)
What is the basis of assessment for employment income?
Receipts basis
General rule for deductibility of expenses
Must be incurred wholly, exclusively and necessarily in the performance of duties.
Examples of Deductible expenses for employment income?
- Professional subscription fees
- Charitable donations under the payroll deduction scheme
- Travel expenses
- Capital allowances
- Contribution to occupational pension scheme
AMAP calculation
First 10,000 miles is 45p. Over 10,000 miles is 25p.
= AMAP - no benefit
> AMAP - excess benefit
< AMAP - difference deductible
What is the basic charge for living accommodation?
Higher of:
- Annual value of the property, and
- rent paid by the EMPLOYER
What is the additional charge for expensive accommodation?
(Cost of providing accom + improvements - £75,000) x ORI (%2.25)
Company car for private use benefit formula
List price x % - Employee contributiions
What is included in the list price of a company car?
- List price when registered
- Plus optional extras
- Less: capital contributions MAX £5,000
Diesel car NOT meeting RDE2 percentage calculations
4% HIGHER than A car that does meet standards.
What is the maximum percentage for car benefit calculations?
37%
What qualifies as and what is the treatment of a pool car.
- Must be used by more than one employee
- Must not be normally kept at an employee’s residence.
- Private use must be merely incidental.
