Posted: January 25th, 2017

Prepare a detailed calculation of Susan Phillips’s income tax payable and her NICs for 2014/2015. Your calculation should be set out in a way that Susan (not a tax expert) can easily understand.

You have been contacted by your good friend Mary Phillips. She is aware that you are studying taxation at University, and she would like you to help some of her family members with some tax issues. You are required to deal with 3 PARTS PART 1 Susan Phillips has recently received a major promotion at work and she will now be the Financial Controller for her employer, a listed company. From 6 April 2014 Susan will be receiving a greatly enhanced salary of £89,031 and employee benefits (paid by her employer) in her new position and now would like to know how much tax she will have to pay in the current tax year. Susan also has other income as detailed below. The proposed package of benefits is as follows: 1. Car – her own choice up to the value of £25,000 (see note 1) 2. Unlimited fuel for car 3. Susan will also have use of a company flat (see note 2) Other Income In the tax year 2014/2015 Susan also received interest on her building society account equal to 5% of her gross salary. This is the amount net of taxation. In addition she has a portfolio of investments and in the tax year 2014/2015 she received dividend income equal to 10% of her gross salary. This is the amount net of taxation. Susan also makes charitable donations (which qualify as gift aid) to the RSPCA. The net value of these donations is equal to 2% of her gross salary. Susan is entitled to the basic personal allowance and she does not belong to a pension scheme. Note 1 Choose a car (your personal preference) from the web for Susan’s new vehicle. Give full details of make, model, list price, type of engine and CO2 emission. Print off the details of the car from the website you used.  Note 2 Susan moved into the company flat in Limehouse on 6 May 2014. The property was purchased by her employer in 2011 for £180,000 and the company had spent £21,000 in August 2011 on improvements to the property. The property currently had a market value of £245,000 and has a rateable value of £9,600. The company provided all the furniture at a cost of £35,000, Susan is required to pay all the utility bills for the property. REQUIRED: Prepare a detailed calculation of Susan Phillips’s income tax payable and her NICs for 2014/2015. Your calculation should be set out in a way that Susan (not a tax expert) can easily understand. PART 2 Write an accompanying report that explains your calculations in Part 1 to Susan in user friendly terms. Suggested word length = 700 words. PART 3 James Phillips is about to start his own business, and he is forming a company of which he will be a director. The company will take on 12 employees who will be paid a monthly salary. James is aware that the company will have to operate the PAYE system and but he has no knowledge as to how PAYE works. REQUIRED: Write a briefing paper for James that gives a ‘user friendly’ guide to the PAYE system