AAT website 2016 practice paper  HELP!
bluntigirl
Registered Posts: 3
in Personal Tax
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
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
0
Comments

Hi,
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.1 
Thanks. This really has helped!0