PTAX FA2016 Sample Assessment 1 Task 1.2 PLEASE HELP

shanekenno

Hi Guys,

I am really struggling to get my head round the answer of this question.

The details are as follows;

Justin was provided with living accommodation by his employer on 17 June 2014 and remained their all tax year

Annual Value: £8200
Employer Purchased on 31.03.2017 : £87000
Market Value of the property 17.06.14 : £225000
Market Value of the property 06.04.2016: £254000

Complete the table below to calculate Justin Total taxable benefit in kind for the accommodation:

Annual Value: 8200
Expensive Accommodation Benefit Charge: ???? answer 4500 but dont know how they get it?

Thanks in advance

Shane

PeterC

This is slightly unusual!

£4,500 = 3%(225,000 -75,000)

which is the accommodation benefit charge, ASSUMING THAT:

1) the employer purchased the property more than six years before 17/6/14 (ie. NOT on 31/3/17)
2) the official rate of interest for 2016/16 is 3%