CHAPTER 7: Income from Employment (1)
A set of multiple choice questions for this chapter is available on the accompanying website.
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7.1 List the criteria which might be used to distinguish employment from self-employment.
7.2 Malcolm’s gross annual salary is £57,500. He is also entitled to an annual bonus which is
based on his employer’s profits for the previous calendar year. His bonus for the year to
31 December 2021 was £8,350 (which he received on 9 April 2022). His bonus for the
year to 31 December 2022 is £9,570 (which he receives on 18 April 2023). Malcolm is
not a company director. Calculate his employment income for 2022-23.
7.3 Which of the following forms of income from employment would be exempt from income
tax in tax year 2022-23?
(a) Free meals in the company canteen.
(b) Removal expenses of £4,500.
(c) £1,000 given to an employee on reaching 25 years of service with his employer.
( d) A canteen of cutlery given to an employee on his marriage.
( e) A mileage allowance of 35p per mile given to an employee who drives her own
motor car for 2,500 business miles per year.
(f) A payment of £10 per week made to a homeworker to cover the additional costs of
working from home.
7.4 Which of the following expenses incurred by an employee would be deductible when
computing employment income for tax purposes?
(a) Travel between work and home. (b) Travel between work sites.
( c) Professional subscriptions. ( d) Protective clothing.
( e) A suit to wear at the office. (f) Entertaining expenses.
On 21 March 2023, Penny is made redundant by her employer. She receives statutory
redundancy pay of £4,750 and an ex gratia compensation payment of £32,000 (none of
which ranks as a PILON). Her only other income in tax year 2022-23 is her salary of
£46,685 and building society interest of £1,000. She is not a Scottish taxpayer.
Calculate Penny’s income tax liability for 2022-23. Lecture
Ian is a freelance television technician. In a typical tax year he works for approximately
20 separate TV companies. None of his engagements with any of these companies lasts
for more than 10 days at a time. All of his work is performed at studios owned by the TV
companies, using very expensive equipment also owned by these companies.
The TV companies initially book his services by telephoning him at his home (where he
has an office) and then send a confirmation letter giving the dates of the engagement and
the amount of the agreed fee. Ian’s work is very skillful and he is required to do this work
himself. He is not allowed to subcontract the work to anyone else.
Is Ian employed or self-employed?
Examples-3_Week-13_2022-2023
Example_8.2
Example_8.7a
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