AAT website 2016 practice paper - HELP!

bluntigirl Registered Posts: 3
I have practiced the AAT FA2016 personal tax paper (AQ2013 standard) and there are two questions where I have no idea how the answer is worked out. The first one is 1.2 c) working out using average method for a loan that has been given to an employee. The answer is 315, but how do you get that answer???? I am at a total loss on this one.

The other question that is puzzling me is 1.11 on capital gains tax. Why is the answer £1650 and only taking onto account the 20% liability and not the 10% as well?

I passed the assessment but its driving me a little crazy not knowing how you get to the answer, just in case it comes up in the exam!!!

Any answers/workings out would be much appreciated.

Thanks :)


  • Zoynal98
    Zoynal98 MAAT, AATQB Posts: 65
    edited August 2017

    Please see below workings:

    1.2 c)

    Loans Benefit in Kind Formula = ((Opening Loan Balance + Closing Loan Balance)/2) x 3% (HMRC Official Rate)

    ((9,000 + 12,000)/2) x 3% = £315

    Opening = 9,000 is the opening balance at the beginning of the fiscal year. (4,000 + 5,000 = 9,000)
    Closing = 12,000 is the closing balance at the end of the fiscal year. (Jules did not repay the principle so to date she owes 12,000)

    Divide this by 2 to get the average then multiply the result by 3% which is the Official HMRC Rate.

    1.11 c) Capital Gains Tax payable by Lou

    Gains after Annual Exemption = (Proceeds/MV - Cost) - Annual Exemption

    Use the Proceeds value
    (42,000 - 20,650) - 11,100 = 10,250

    Lou has £4,000 (32,000 - 28,000 = 4,000) left in the Basic tax rate band so you would tax £4,000 of the £10,250 at 10% and the rest (£6,250) at 20% so, £4,000 x 10% = £400 and £6,250 x 20% = £1,250 which totals to £1,650.

    Hope this helps.
  • bluntigirl
    bluntigirl Registered Posts: 3
    Thanks. This really has helped! :)
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