Personal Tax 2011 standards : Practice cba

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nicd1981
nicd1981 Registered Posts: 243 Dedicated contributor 🦉
in AAT Level 4 (Level 8 in Scotland)
Im really Confused as question 1.6 part b

on 1st oct ken was provided with the loan of a music system costing 1000 for personal use calculate the benefit in kind: answer is £100

Now as its below 5000 i had the answer as 0
why is it 100? Is it because its for personal use? and even then how does it come out at 100?

sorry, but exams on Tuesday and im struggling with remembering everything !

advice would be appreciated xx

nic x
Nicola Donnelly ,MAAT, MIP, CIMA Dip MA

Email: donnellynicola7@gmail.com
Facbook Page: MEND Accounting
Blog: http://wannabeanaccountant.blogspot.co.uk
Twitter: @mendaccounting
Website: http://www.mendaccounting.co.uk

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  • Jo Clark
    Jo Clark Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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    Hello Nic

    You need to calculate the benefit for assets made available for private use. It is calculated as 20% of the £1,000 and then pro rated for the year. This is not a loan when the rules are different.

    Hope this helps.


    JC :o
    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • nicd1981
    nicd1981 Registered Posts: 243 Dedicated contributor 🦉
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    Thanks Jo, I understand now. So as its a loan of an asset instead of a loan of cash its 20% and as its October its divided by two as October is the 7th month so the last 6 months of the year ? divide by two
    yes that makes sense
    Thanks very much jo x
    Nicola Donnelly ,MAAT, MIP, CIMA Dip MA

    Email: donnellynicola7@gmail.com
    Facbook Page: MEND Accounting
    Blog: http://wannabeanaccountant.blogspot.co.uk
    Twitter: @mendaccounting
    Website: http://www.mendaccounting.co.uk
  • Jo Clark
    Jo Clark Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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    nicd1981 wrote: »
    Thanks Jo, I understand now. So as its a loan of an asset instead of a loan of cash its 20% and as its October its divided by two as October is the 7th month so the last 6 months of the year ? divide by two
    yes that makes sense
    Thanks very much jo x


    Hello Nic

    Yes, it is a loan of an asset rather than a beneficial loan where you calculate the benefit if the loan is over £5k using the ORI. Remember you calculate the full amount of the loan, not just the difference over £5k :)

    Yes you can divide by two or take the 20% of £1k and then multiply 6/12 - same thing.

    Good luck Tuesday.


    JC
    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • toria1979
    toria1979 Registered Posts: 34 Regular contributor ⭐
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    i was stuck on that question too, i have my exam today but i didnt understand the loan part of it or the sound system part of it
  • Jo Clark
    Jo Clark Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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    How did your exam go Toria?

    Good luck tomorrow Nic... any last minute questions post them here as I am sure there will be someone who can help if needs be :)
    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • salih
    salih Registered Posts: 81 Epic contributor 🐘
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    on the same pratice paper on 1.5 the co2 emmision is 13% it says the car is 118g/km so i round it to the nearest 5 which is 115 then i takeaway it by 80 76-120 isg/km is 10% divided it by 5 get 7 + 10= 17 then plus 3 because its a diesel. Must be doing something wrong someone please help me got exam today

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