Benefits

Test your understanding

The following scenario relates to questions 1–5.

Richard’s employer provides him with the following benefits:

• Living accommodation since 1 June 2020. The property was purchased on 10 May 2013 for £162,000, and was valued at £198,000 on 1 June 2020. Improvements costing £7,000 were made to the property during November 2017.
• An interest free loan throughout the tax year 2023-24. The balance outstanding at 6 April 2023 was £24,200, and at 5 April 2024 it was £19,600. Richard’s taxable benefit in respect of this loan is calculated using the average method.
• A home entertainment system since 1 November 2023. The entertainment system cost £5,160, and it is provided for Richard’s personal use.

Required:

(1). On what figure will Richard’s additional living accommodation benefit be calculated for the tax year 2023-24?

A  £198,000
B  £94,000
C  £123,000
D  £169,000

(2). What is Richard’s taxable benefit in respect of the interest free loan for the tax year 2023-24?

A  £986
B  £52
C  £441
D  £493

(3). Where an employee is given an asset which has previously been provided to them, how is the taxable benefit calculated?

A  The greater of (1) market value at the date the employee is given the asset and (2) the market value of the asset when first made available to the employee less any amounts previously assessed as benefits

B  The lower of (1) market value at the date the employee is given the asset and (2) the market value of the asset when first made available to the employee less any amounts previously assessed as benefits

C  The greater of (1) market value at the date the employee is given the asset and (2) the market value of the asset when first made available to the employee plus any amounts previously assessed as benefits

D  The lower of (1) market value at the date the employee is given the asset and (2) the market value of the asset when first made available to the employee plus any amounts previously assessed as benefits

(4). What is Richard’s taxable benefit in respect of the home entertainment system for the tax year 2023-24?

A  £1,032
B  £430
C  £2,150
D  £5,160

(5). Which of the following benefits can never be exempt?

A  Meals in a staff canteen
B  An allowance for working from home
C  Health club membership
D  Relocation costs

Answers