Taxation Calculation and Analysis

This practical assignment requires a detailed calculation of Imogen's tax liabilities for the 2016/17 tax year. It involves calculating her tax-adjusted trading profit from her self-employment, income tax payable, and national insurance contributions as both an employee and self-employed individual. The assignment also requires an analysis of the consequences of late tax payments, including interest charges. The solution should include clear workings, capital allowance computations, and be presented in a word document.

Taxation requirements:
- All calculations and working Outs should be shows
- Should be in clear English
- Should include capital allowance separate computation as well
(e.g. main pool, special pool)
- Should be done on word documents
- Should calculate (a) (b) (c) (d)

Question 1
On 31 December 2016, Imogen resigned as an employee of Dhissom plc. The
company had employed her as pastry chef since 2001. On 1st January 2017, Imogen was now
self-employed and started running her own Indian restaurant, preparing accounts to 30th
September. She is now self-employed as from 01 January 2017. The following information is
available for the tax year 2016/17.
Employment
1. During the period 6th April 2016 to 31st December 2016 Imogen’s total gross salary from
her employment with Dhissom plc was £57,000. Income tax of £9,505 was deducted from
this figure under PAYE.
2. Imogen used her personal motor car for both business and private purposes during the
period from 6th April 2016 to 31st December 2016 as an employee of Dhissom plc . She
received no reimbursement from Dhissom plc for any of the expenditure incurred.
Imogen’s total mileage during the period was 15,000 miles, shown as below:
No. of miles
Normal daily travel from home and workplace 4,650
Voluntary travel from home and workplace to turn off the fire alarm 120
Travel from workplace and suppliers 750
Travel from home to a seconded temporary workplace for two
months
3,800
Private travel 5,680
Total miles 15,000
3. On 1st October 2016, Dhissom plc paid £13,000 towards Imogen’s removal expenses
when she permanently relocates to Taunton, to work in a restaurant owned by Dhissom
plc.
4. Imogen contributed 6% of her gross salary of £57,000 into Dhissom plc’s HMRC
approved occupational pension scheme.

Self-Employment
1. Imogen’s income statement for her Indian restaurant for the 9 month period ended 30th
September 2017 is as follows:
£ £
Gross Profit 192,300
Depreciation 5,250
Motor expenses note 2 4,200
Property expenses note 3 19,200
Allowable expenses 76,050 (104,700)
Net profit 87,600
2. Imogen purchased her Indian restaurant on 1st January 2017.
3. She lives in an apartment that is situated above the restaurant and 25% of the total
property expenses of £19,200 relate to this apartment.
4. On 1st January 2017, Imogen purchased a motor car with CO2 emissions of 125 g/km for
£16,667 and cooking equipment for £5,400.
5. During the period 1st January to 30th September 2017, Imogen drove a total of 6,000
miles, of which 1,500 miles were for visiting her mother who lived in Exeter. You can
assume that HMRC have agreed to a further 500 miles for private journey.
Other income
1. During the tax year 2016/17, Imogen received bank deposit interest of £3,000 and
dividends of £10,500.
Additional Information
1. Imogen contributed £1,600 into a personal pension scheme during the period 1st January
2017 to 5th April 2017.
2. She did not make any payments on account of income tax in respect of the tax year 2016-
17.

Required
(a) Calculate Imogen’s tax adjusted trading profit for the nine month period ended 30th
September 2017.
(b) Calculate the income tax payable by Imogen for the tax year 2016-17.
(c) Calculate Imogen’s national insurance contributions as an employed person for
Dhissom plc and a self-employed person for the tax year 2017/18.
(d) Advise Imogen of the consequences of not making the balancing payment for the tax
year 2016/17 on the due date. Assume that the HMRC interest rate on late paid
income tax is 3%.
(Total 50 marks)