BACKGROUND
You have been contacted by your good friend Mary Phillips. She is aware that you are studying taxation at University, and she would like you to help some of her family members with some tax issues.
You are required to deal with ALL 3 PARTS
Each of the 3 Parts will carry equal marks.
PART 1
Susan Phillips has recently received a major promotion at work and she will now be the Financial Controller for her employer, a listed company.
From 6 April 2016Susan will be receiving a greatly enhanced salary(see note 1) and employee benefits (paid by her employer) in her new position and now would like to know how much tax she will have to pay in the current tax year.Susan also has other income as detailed below.
The proposed package of benefits is as follows:
1. Car - her own choice up to the value of £25,000 (see note 2)
2. Unlimited fuel for car
3. Susan will also have use of a company flat (see note 3)
4. Access to a personal computer for home and work use (see note 4)
Other Income
In the tax year 2016/2017Susan also received interest on her building society account equal to 5% of her gross salary.
In addition she has a portfolio of investments and in the tax year 2016/2017she received dividend income equal to 10% of her gross salary.
Susan also makes charitable donations (which qualify as gift aid) to the RSPCA. The net value of these donations is equal to 2% of hergross salary.
Susan is entitled to the basic personal allowance and she does not belong to a pension scheme.
My date of birth 27-10-1994
Note 1
Use your date of birth to work out her salary to the nearest £.
Simply reverse your date of birth and divide by tento getSusan's annual salary.
E.g. a date of birth of 22 August 1991(22/08/91) produces a salary of £91,082. (910822/10)
Note 2
Choose a car (your personal preference) from the web for Susan's new vehicle. Give full details of make, model, list price, type of engine and CO2 emission. Print off the details of the car from the website you used.
Note 3
Susan moved into the company flat in Limehouse on 6 May 2016. The property was purchased by her employer in 2012 for £180,000 and the company had spent £21,000 in August 2013 on improvements to the property.
The property currently had a market value of £245,000 and has a rateable value of £9,600. The company provided all the furniture at a cost of £35,000, Susan is required to pay all the utility bills for the property.
Note 4
On 6 July 2016the company lent Susan a computer costing £5,000 for use when commuting and in her home which she used for both business and private purposes.
REQUIRED:
Prepare a detailed calculation ofSusanPhillips's income tax payable and her NICs for 2016/2017.
*(income= nearst £) *(tax -nearest penny)
Your calculation should be set out in a way that Susan (not a tax expert) can easily understand.
PART 2
Write an accompanying report that explains your calculations in Part 1 to Susan in user friendly terms. Remember - Susan does not have much knowledge of Taxation issues!
Suggested word length = 700 words/ max 850 words
PART 3
James Phillips is about to start his own business, and he is forming a company of which he will be a director. The company will take on 12 employees who will be paid a monthly salary.
James is aware that the company will have to operate the PAYE system and but he has no knowledge as to how PAYE works.
REQUIRED:
Write a briefing paper for James that gives a ‘user friendly' guide to the PAYE system. Your paper should include as a minimum the following areas:
- Tax codes and tax code suffixes,
- Operation of the system,
- Real Time Information,
- PAYE forms,
- End of year returns,
- Key dates,
- Penalties for non-compliance