Sample assessment 1 task 1.3

Needhelp101
Needhelp101 Registered Posts: 1
Hello,

Could someone please help with the workings for the question relating to Jules?

Thanks.

Answers

  • CornishPixie
    CornishPixie Registered, MAAT, AATQB, AAT Licensed Accountant Posts: 117
    Ok, I would approach this as follows:

    The basic charge must be the higher of the annual value or the rent paid by the employer. There is no rent mentioned so the basic charge will be £6,900.

    The value of the property is termed 'expensive' accommodation as it cost over £75,000. So the calculation would be £236,000 - £75,000 = £161,000. Multiply this by the HMRC official rate which I believe is 2.5% gives you a calculation of £236,000 - £75,000 = £161,000 x 2.5% = £4,025

    Add this to the basic charge: £6,900 + £4,025 = £10,925 but Jules was only in the accommodation from 1 August so that's only 8 months so x 8/12 = £7,283.33

    Now we need to take off the contribution paid by Jules. He only occupied the property from 1 August so it's only 8 months = £500 x 8 = £4,000

    £7,283.33 - £4,000 = £3,283

    So the full calculation would look like this: (£6,900 + 2.5% (£236,000 – £75,000)) × 8/12 = £7,283.33 - £4,000 = £3,283.33 or £3,283 in rounded pounds.

    Bear in mind that slightly different rules apply if the house had been purchase more than 6 years prior to the person moving in but that's not relevant in this scenario.

    Hope that helps.
  • CornishPixie
    CornishPixie Registered, MAAT, AATQB, AAT Licensed Accountant Posts: 117
    Amend my answer above as Jules moved in to the property in August 2015 and this question relates to the 2018/19 tax year so, therefore, there would NOT be a pro-rating of the amounts. So the calculation will be:

    (£6,900 (basic cost) + 2.5% (£236,000 – £75,000)) = £10,925 - £6,0000 (rent paid by Jules) = £4,925.

    See how easy it is to miss information in the question!
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