Taxation: Calculation of Income Tax and National Insurance Contributions

TAXATION

Table of Contents
SECTION A: Option 1 – Employment............................................................................................3
SECTION A: Option 2 – Self Employment....................................................................................5
SECTION B.....................................................................................................................................7
Bibliography..................................................................................................................................10
Workings........................................................................................................................................11

SECTION A: Option 1 – Employment
1. Calculate the amount of property income that is taxable in 2019-20. Provide explanations
for the tax treatment of each item of income and expenditure.
Non-
Savings Savings Dividends Total
Tax
Deducted
Property income £19,020.00 £19,020.00
2. Calculate the total income tax payable by Rebekah for 2019-20, including the tax on the
property income and investment income in (1) above. Provide explanations for the tax
treatment of each item in the computation.
Non-
Savings Savings Dividends Total
Tax
Deducted
Employment
income £94,117.00 £94,117.00
Property income £19,020.00 £19,020.00
Bank Interest £650.00 £650.00
Dividend £8,250.00 £8,250.00 -£36,500.00
Total income £113,137.00 £650.00 £8,250.00 £122,037.00
-£36,500.00
Less P. A. -£5,281.50 £0.00 £0.00 -£5,281.50
Taxable income £107,855.50 £650.00 £8,250.00 £116,755.50
Taxed as:
Non-savings
£34,500.00 20.00% £6,900.00
£73,355.50 40.00% £29,342.20
Savings
£500.00 0.00% £0.00
£150.00 40.00% £60.00
Dividend

£2,000.00 0.00% £0.00
£6,250.00 32.50% £2,031.25
£116,755.50
Tax liability £38,333.45
Tax reducer -£25.00
Tax paid -£36,500.00
Tax
payable £1,808.45
Notes:
1- Pension is deducted from the salary.
2- Car and fuel benefit is taxed as BIK.
3- Loan from employer is taxed as BIK.
4- Relocation costs only £8,000 is permitted, above this is considered
BIK
5- Annual party, only £150 is allowed per employee and his/her family.
6- Computer loan is taxed
as BIK
7- Golf club subscription is taxed as BIK.
3. Calculate the National Insurance Contributions payable by Rebekah for 2019-20.
NIC: Employee £4,967.56
4. Calculate the National Insurance Contributions payable by Main Street Consultants
Limited in connection with the employment of Rebekah for 2019-20.
NIC: Employer £9,246.12