Help with personal tax question please.

Dean93

Hi guys,

So i'm doing the Personal tax Practice papers on the Osborne websites as you do.. and I stumbled on a question. Question 6 on Test two Finance Act 2014.
Joe is employed with a salary of £28,600 pa & the following information relates to the tax year 2014/15

''He travelled 9k miles on business in his own car. For this he was reimbursed £3150 by his employer''. When he should have got 4050 so he can take off 900 from his employment income.

''He parked free in a car park at his work place'' 'exempt'

'Took a loan out for 4.5k at an interest rate of 1%' 'exempt up until 10k'

Now this one..

'His employer provided him with cash to pay for childcare. This amounted to £1,560 for the year'. now correct me when im wrong.. he is Basic Rate tax payer... (up to £31,865) meaning he should get £55 per week?.. which is 2860 for the year. shouldn't the difference between 2860 and 1560 come off his employment income?... because the answer adds it to the childcare payments. under his total assessable employment income. or is it because he was given cash? Im totally clueless.

My first time posting a question,
Exam next Wednesday

Many thanks,

Dean

CeeJaySix

Dean,

In short, yes, because it was paid as cash. Only childcare vouchers attract tax relief.

Although it's not relevant here because of the cash, if it was paid in vouchers he would not be entitled to tax relief on the difference between the £55/week and what he actually gets (£30/week) - that's motor expenses only.