Personal Tax - Practice Assessment (2013)

ReelSpike

Hello. I have a question on Personal Tax (Level 4). On the practice paper on AAT website (2013), Task 3a.

The wear and tear on the answer is shown as £343, however I calculate it
to be £328 as below:

Rental Income: 6180
Redecoration expense: (1000)
Insurance: (1900)
Water rates: (600)
Council Tax: (2150)

Now, I thought Wear and Tear was 10% of the rental income less expenditure (but not including Rates and Council Tax). If that's the case, then I calculate W+T to be: 10% x (6180-1000-1900) = 328.

But AATs answer says £343. Is this an error on the AAT answer or in my workings?

KernowAccountant

Other way around... W&T allowance is calculated on rents receivable less expenses usually borne by the tenant, i.e. (6,180 - 600 - 2,150) x 10% = £343.

KernowAccountant

The statutory reference for the above is ITTOIA 2005 s.308(C).

CeeJaySix

What Kernow said - in the textbooks from memory it's only ever council and water rates.

michellelawler1974

wear and tear is work out at either 10 % of the rent if there is no council tax and water rates or if there is the total rent minus the water rates minus the council tax x 10 %. 6180 - 600 - 2150 = 3430 x 10 % = 343