PTAX Question
JoshhSwFc
Registered Posts: 9
An employer offered interest free loans to each of his employees as follows:
Jules received the following interest free loans. She has not repaid any of these loans.
01/01/13 4000
01/01/16 5000
01/01/17 3000
Using the average method, what is Jules's assessable benefit in kind on these loans in 16/17?
The answer is £315. I may be acting dumb at this time in a morning but I need some guidance!
Much appreciated
Jules received the following interest free loans. She has not repaid any of these loans.
01/01/13 4000
01/01/16 5000
01/01/17 3000
Using the average method, what is Jules's assessable benefit in kind on these loans in 16/17?
The answer is £315. I may be acting dumb at this time in a morning but I need some guidance!
Much appreciated
0
Comments

Loan at 6/4/16 is £9,000
Loan at 5/4/17 is £12,000
Average = (9000+12000)/2 = 10,500
Benefit = 10,500 x official interest rate (given in the question or accompanying tax data)0 
Thanks a lot PeterC0

Hi Josh,
The answer would be £1650  this is because Lou is not a connected persons, therefore we would use the proceeds in the calculation of the gain. Therefore:
42,000
(20650)
Gives chargeable gain of
21350
Less annual exempt amount
(11100)
Taxable gain: 10250.
Since Lou has 4000 remaining in his basic rate tax band (32000  28000)
4000 of the taxable gain is charged at 10% to give £400
and the remaining 6250 is charged at 20% to give £1250
Total of £1650 capital gains tax payable. Hope that helps!0
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