Questions-Answers on Taxation

Running head: TAXATION 1
Tax
Name:
Institution:
Date:

TAXATION 2
Question 1
a) Calculate Sephora’s employment income and total income tax payable (refund)
for The tax year 2019/20 and state when any additional tax is due.
Sephora’s employment income Tax
For the Tax year Ended 2019/2020
Tax Computation GBP GBP
Earned Income :
Salary 110,000
Add: Benefits
House allowance 13,000
Fuel 20,500
Laptop allowance (20%*950) 190
Mobile phone @ cost 150
Travel allowance on standard rail
76
Total Earned Income 143,916
Less: Personal deductions
Mortgage Interest/ interest on building
society
(800)
Interest from ISA account (1500)
Premium Bond winnings (1000)
Gift Aid Scheme Donations (1000)
Total Personal Deductions (4300)

TAXATION 3
Taxable Net Income 139,616
Less: Personal reliefs
Tax Relief 0
P.A.Y.E (3,000)
Total Taxable Net Pay 136,616
Tax Due
GBP 0 to 37,500 @ 20% 7,500
GBP 37,501 to 150,000 @ 40%
45,000
Over GBP 150,000 @ 45%
Total Tax Due 52,500
Workings & Assumptions
1. for self-invested personal pension schemes or personal pensions, the contribution paid
into the schemes are usually treated as have been paid net of basic rate on income tax
relief. For example, Sephora’s workplace personal pension scheme, the pension
provider is allowed to claim back a 20% basic tax rate from the HMRC to add to
Sephora’s contribution. For a higher rate tax payer, he or she can claim a further tax
relief from HMRC (at a higher arte less the already claimed basic rate by the pension
scheme.)

TAXATION 4
2. house allowance is a taxable benefit and will be valued at a cost of GBP 13,000
3. Fuel expenses paid by the employer for the sake of smooth running of the business is
a taxable benefit and for private is taxable (Feld, et al,2016)
4. Personal use of the company’s laptop is a taxable benefit
(20%*950)=190
5. Mobile phone use for business is not taxable on the employee’s side since she is using
it for business required by the company.
6. Dividend income is taxable on the receiver hand. It is taxed at source and therefore
capital gain tax on the GBP 20,000 dividend received from a UK company is taxed at
5% at source.
7. Personal deductions include interest on mortgages or building society, charities and
donations given and interest on ISA account (Huizinga, Voget, & Wagner, 2018)
8. Total earned income is GBP 143916
9. Total personal deductions is GBP 4300
10. Total Taxable income is GBP 139,616
11. Sephora’s Total Tax Due as per the FY 2020 tax Bracket
Tax Due
GBP 0 to 37,500 @ 20% 7,500
GBP 37,501 to 150,000 @ 40%
45,000
Over GBP 150,000 @ 45% - /N/A
Total Tax Due 52,500