PTAX Question Help

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Jamesw
Jamesw Registered Posts: 2
in AAT Level 4 (Level 8 in Scotland)
Tax Year 2013/14

Hi Can someone help me with this question. Roween received the following in 13/14 . Use of a house that was bought by her employer in March 2005 for 214K. House was extended in 09 at a cost of £18,500. In June 2013 the house was further extended for £5,400. House annual value is £4,700.

The answer for taxable benefit in kind rising from the accommodation is £11,000. I dont understand that 11K answer. I do know that the cost of accommodation used in the calculation will be £232,500.

Thank You!

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  • Kaii
    Kaii Registered Posts: 5
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    Hi James,

    From my working:

    Roween moved in in 13/14 - the house was purchased by her employer in March 2005 which was greater than six years ago. Therefore the value you would use on the house is current market value.

    The current market value of the house would be:
    214,000+18,500 = £232,500 (as you have identified). We do not incluide the further extension of the house as the improvement was completed in the current financial year.

    The taxable benefit is calculated as the annual value + expensive accomodation allowance of (232500 - 75,000) * HMRC Official rate (3% currently).

    4700
    +4725
    =9425

    This did confuse me at first, however looking into this the answer is £11,000 because the HMRC official rate in 2013/14 was 4%

    HMRC List of Official Interest Rates

    Hope that helps!

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