Nobody downloaded yet

Taxation - Essay Example

Comments (0) Cite this document
Summary
Mr. Jedward and Jumbo Company tax computation. Tutor: Subject: Date of birth - 12/01/1989. Question 1 Salary computation for Mr. Jedward 12/01/1989. 890112/10 = ?89 011. Computation for Mr. Jedward’s income tax for the year 2011/2012 Salary ?…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.8% of users find it useful
Taxation
Read TextPreview

Extract of sample "Taxation"

Download file to see previous pages 50,760.34 Salary - Tax - NIC Tax brackets Income 10% (starting rate for savings only) 0 - ?2,560 20% for basic rate 0 - ?35,000 40% for higher rate ?35,001 - ?150,000 50% for additional rate Over ?150,000 (HM revenue and Customs 480 (2011) The liability of income tax payable from the above computation is ?25,718.3. A deduction of personal allowance of 7,475 is made in the year 2011/2012 (Great Britain: Parliament: House of Commons: Treasury Committee, 2011,103). This figure was increased by ?1000 (Budget, 2011, pp.1).The National insurance Contributions (NICs) are calculated under the annual brackets for directors. This is payable by the employer – Jumbo Company under the PAYE system on the payroll. The NICs is ?6,027.7. This is computed under the annual rate of the Upper Earnings Limit (UEL) of 12% of ?42484 minus ?7228 = ?35256 and an addition of 2% of the amount exceeding this figure. The company is liable to pay this amount of ?6,027.7 to the tax authorities. Question 2 Value of taxable benefits in kind Car (see appendix) (10% * ?33,464.19) ?3,464.19 Fuel for car ?20,000 Accommodation (higher of 75,000 at the rate of 4.75%) (3,000,000- 75,000) * 4.75% (Malcolm, 2010, 435) ?138,937.5 House benefit ?15,000 Private health ?3,000 Use of furniture ?35,000 ?215,401.69 NICs Class 1A on benefits (13.8% * ?215,401.69) ?29, 725.4 Section 114, 149, 174 of HM revenue and customs in the United Kingdom explains that benefits in kind including cars for private use, incentives etc. given to directors are taxed at special rates. Although they do not qualify as individual employee’s salary, they are levied for tax purposes. They are levied for income tax at normal tax brackets rates and the deduction for NICs Class 1A is calculated at a higher rate of 13.8 % of the total value of benefits. Section 201(2) of HMRC gives a list of the benefits that are liable for tax purposes. House benefit is taken as the figure of rateable rent payable of that house or the annual amount given. A car bought by the company is deemed as benefit for the employer when it is used for part or full time use by the director. In our case, the car is for fulltime use. The Co2 emission is 119g/km hence it is liable for a benefit of 10% of its cost according to HMRC tax regulations i.e. it lies under the category of less than 12og/km Co2 emissions. Fuel benefit is taken for the portion used for private purposes. An assumption is made at a figure of ?20,000 fuel usage. The whole amount is a benefit in kind liable for tax computation purposes. If the employer purchases the director’s house, the only allowable amount not liable for tax is a purchase price below ?75,000. The provision of accommodation benefit is taken at a rate of 4.75% of the figure above ?75,000. The cost of this house is ?3,000,000. The only amount liable is ?2,925,000 as an extra charge for accommodation. The total benefit is therefore ?138, 937.5. Use of furniture is gift or an extra benefit from the employer. The whole amount is liable for tax computation under section 201 (2) HMRC. This is an extra expense borne by the employer – Jumbo Company for the director. Contribution by the employer to private medical schemes for the director is a benefit in kind liable for taxation. It is taken as the whole amount paid to the scheme for the director. (House of Commons – Spending Review Committee, 2010, pp. 1) Income tax payable by Mr. Jedward for year 2011/2012 Salary ?89, 011 Total benefits in kind ?215,401.69 Income ?304,412.69 ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Taxation Essay Example | Topics and Well Written Essays - 2000 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1392971-taxation
(Taxation Essay Example | Topics and Well Written Essays - 2000 Words)
https://studentshare.org/finance-accounting/1392971-taxation.
“Taxation Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/finance-accounting/1392971-taxation.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Taxation

Taxation

...………………………………………………………………………….xxxxxx …………………………………………………………………….xxxxxx …………………………………………………………………………xxxxx ………………………………………………………………………..xxxxx @2012 Taxation Q 1.1 General changes proposed for taxation of the company cars, for the company and for employees, for the next few tax years. According to Deloitte, there are several of changes that the government has proposed that will influence the cars belonging to the company as well as the private fuel used by both employees and employers. These changes aim at increasing further the tax charge on cars with high emissions of CO2. Back in 2002, the government introduced new reforms on company cars. The company car tax reform encourages people to buy of choose cars...
5 Pages(1250 words)Essay

Taxation

...Political philosophies and Taxation There are various political philosophies in the world, and each of them possesses a considerably different view on the role of government in ensuring equality through taxation and other initiatives. This work intends to identify how liberalism and conservatism deal with the concept of taxation. In simple terms, Rawlsian liberalism claims that a just society has three qualities; a fair system of cooperation, a well-ordered society, and all citizens are free and equal (Rawls 87). In such a society, every member has the capacity to identify what is good, and has the right to discuss the concept with others and make necessary changes based on what is...
6 Pages(1500 words)Essay

Taxation

...Running head: TAXATION Taxation This paper describes UK tax environment; its types and income. Role and responsibility of a tax advisor has been discussed. After that different method of data collection is presented. Finally, a real life example is taken under consideration and the person’s income, amount of income tax payable and net capital gains are determined. Introduction Taxes are a collection of revenue from individuals who are citizens of a country or are residing in the country for purposes of leisure or work. Taxes are imposed to provide revenue for the government and allow the government to improve the civil needs of the country. A good example is the when the tax revenue collected is allocated...
6 Pages(1500 words)Essay

Taxation

...Introduction Tax is a word taken from the Latin language and has existed for thousands of years all around the world in different forms. The word ‘tax’ reffers to a charge/levy imposed by the authority on tax payers. The inability of paying this taxation can lead to punishment. Taxes are imposed by both national and subnational authorities. The payments in old times could be made through different commodities such as wheat, rice, gold or even labor hours. In contemporary taxation laws, taxes are usually paid only in the specific currency of that region. The level of taxation is always a source of debate in a country. Taxation in essence is a system created in order to...
3 Pages(750 words)Essay

Taxation

.... Chattels are personal possessions that are ‘tangible’ assets. They may include furnishings, paintings etc for households. For the taxation of chattels, the rules of the Capital Gains tax are the same as for other assets i.e. the profits earned from the exchange of the chattels are not taxed if they are lesser than or equal to £ 6,000. Exemptions Some of the assets earned by the individuals and companies are exempted from the Capital Gains Tax. These assets are the ones that one is not charged for even after they have been sold for a higher price than what they were initially brought for. According to Lee (2009), the government does not consider the gains from the sale from the ‘exemptions’ as something that has to be...
8 Pages(2000 words)Essay

Taxation

...Taxation Taxation Section Partnership refers to business comprising of two or more owners who pool their talents and resources towards a common business goal. Partnership interest refers the share of profits and losses in the limited partnership. It encompasses the interests in partnership, inclusive of all the transferable interest, management and the other rights. A partnership interest depicts the partnership percentage owned by the partners, and it represents the right to make decisions regarding partnership, the profits and the liabilities involved in partnership (Glover & Wasserman, 2003). Rights conferred to a partner by a partnership interest are as follows: Assignment of partnership interest is...
3 Pages(750 words)Essay

Taxation

...A NEUTRAL TAX SYSTEM Introduction Taxation of savings has an important role when you consider hoe economists evaluate tax systems. These savings are taxed for five reasons; first, it directly affects the tax base thus the term comprehensive income tax. Secondly, it is an important determinant of the extent to which tax system recognizes interpersonal differences in lifetime income, as opposed to annual income. Furthermore, it equalizes the tax burden. The third reason is that taxation of savings is the boundary between the taxation of personal income and taxation of company profits. Fourth, savings taxation can affect both the total amount of savings in...
8 Pages(2000 words)Essay

Taxation

...Taxation Introduction Governments are able to run their day to day activities by use of money collected from households and firms. This money is collected via taxation. Taxation is mechanism by which the government finances its expenditure by imposing charges on citizens and companies (Salanie 2003). The main use of money collected through taxation by the government is to provide goods and services to the public. Taxes also pay for education, highway and public transportation and also retirement benefits. By use of taxation the government can either encourage or discourage certain economic decisions. When the government decreases its levy on goods, there...
8 Pages(2000 words)Assignment

Taxation

...TAXATION By of the of the School The late 17th century saw an introductionof a land tax that was uniform to everybody. It practically formed the main source of revenue for the government particularly throughout the remaining part of the 17th century, the whole of 18th century and for the early part of the 19th century (James, 2009, pg. 24). In December 1798, William Pitt the Younger in his budget, announced income tax in Britain for the first time and it was introduced fully by 1799. This tax was to enable them pay for the equipment and weapons which was to enable them prepare for the Napoleonic Wars. This new progressive income tax introduced by Pitt saw the people remitting a levy of 2 old pence for every pound on...
8 Pages(2000 words)Essay

Taxation

...Should the UK government restore the 50% additional rate of income tax?” Introduction UK is being regarded as one of the few nations in the world which has higher income tax rates, which can be illustrated by the following graph. (Source HRMC 2012:30). Due to higher income tax rates, it is alleged that UK’s competitiveness has lost and hence, it is having a direct impact on its economic growth. Britain should learn from the OECD nations which have reduced their income tax rates to stimulate their economic growth. However, by increasing the income tax rates to 50%, UK has lost its competitive position as being a low-tax regime.When Margaret Thatcher came to power in 1979, she reduced the income tax rates from whooping 83% to 60... the UK...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Taxation for FREE!

Contact Us