Beneficial Loans Question  Personal Tax
imtiaz
Registered Posts: 20 Dedicated contributor ? ? ?
The question
Bob was loaned £10,000 interest free, by his employer on 6 August 2012 and repaid £2000 on 6 September 2012
Calculate the amount taxable on Bob in 2012/2013. Assume an official rate of interest of 4.00%.
The answer given is..
The assessable benefit using the average method is:
1/2 x (£10000 + £8000) x 8/12 x 4.00% = £240
less: Interest paid by employee (nil)
Taxable benefit £240
I don't understand why or where the "8/12" comes from, 8/12 doesn't seem to make sense as a valid proportion of the year the loan is available from the information is available.. Could this answer just be wrong? Or am I missing something? Any help would be appreciated
Bob was loaned £10,000 interest free, by his employer on 6 August 2012 and repaid £2000 on 6 September 2012
Calculate the amount taxable on Bob in 2012/2013. Assume an official rate of interest of 4.00%.
The answer given is..
The assessable benefit using the average method is:
1/2 x (£10000 + £8000) x 8/12 x 4.00% = £240
less: Interest paid by employee (nil)
Taxable benefit £240
I don't understand why or where the "8/12" comes from, 8/12 doesn't seem to make sense as a valid proportion of the year the loan is available from the information is available.. Could this answer just be wrong? Or am I missing something? Any help would be appreciated
0
Comments

August to end of March = 8 months as the loan was taken part way through the tax year.
Edited because i added up August to Feb (I must have thought April came after Feb doh!) as 8 months, it's Friday, give me a break lol.0 
Thanks, I understand now. Now you've explained I went back to the book and yea the information is there, yet I totally over looked it beforehand lol0
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