Principles of Taxation

Principles of Taxation

TABLE OF CONTENT
SECTION A.....................................................................................................................................3
Question 1........................................................................................................................................3
Question 2........................................................................................................................................4
SECTION B.....................................................................................................................................8
Question 3........................................................................................................................................8
Question 4......................................................................................................................................10
REFERENCES..............................................................................................................................13

SECTION A
Question 1
a) John’s employment income for the year ended 5th April 2020.
Computation of the employment income of John Usdaw
Salary 200000
Bonus 15000
Medical Insurance 3000
Insurance Premium Tax 6%
Insurance Premium Tax 180 3180
Motor Car
Cost 35000
taxable % 155gm/km 35%
taxable 12250
Personal use 40%
Taxable 4900
Used for 9 months 3675 3675
Living Accomodation
Annual Value 12000
Contribution of John 3000
Taxable benefit 9000 9000
Loan
Loan amount 12000
Interest rate 0.50%
Allowed rate 2.50%
Taxable interest @ 2% 240 240
Total Employment in-
come 231095
b) John Usdaw’s income tax calculation, including both tax liability and tax payable/repayable
for the year ended 5th April 2020.

Employment Income 227420
Bank Interest 550 0
ISA Saving interest 350 0
Dividend Received 2200
Exempt 2000 200
Assessable income 227620
Deductions
Blind person allowance -2450
Taxable Income 225170
Tax Liability 67864.45
PAYE deducted at
source 60500
Net Tax payable 7364.45
Computation of tax liability
Taxable income 225170
Slab tax rate
0 - 2000 0% 0
2000 - 37500 7.50% 2662.5
37501 - 150000 32.50% 36562.175
Over 150000 38.10% 28639.77
Total Tax liability 67864.44
Question 2
a) Capital allowance calculations for the year ended 30th April 2020.
Capital Allowance calculations
TWDV
1ST MAY 2019
Main pool 4500000
Special rate pool 1125000
Additions