Surrey International Institute
Dongbei University of Finance and Economics
MAN3102 – Advanced Taxation
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Lecture-3 Week-13
Academic year 2022 – 2023; First semester
November 20, 2022 1 / 16
Bene�ts in kind (BIKS)
Main types of BIKS:
1 Living accommodation
2 Assets – including furniture – for personal use
3 Ancillary services connected to accommodation
4 Cars for private use
5 Car fuel for private use
7 Bene�cial loans
November 20, 2022 2 / 16
BIKS: Living accommodation
IF an employer provides an employee with a property
for living accommodation, THEN
the employee incurs a Taxable Bene�t
IF the employer owns the property ⇒
Taxable Bene�t = ‘annual value’ of the property
IF the employer rents the property ⇒
Taxable Bene�t is the higher of:
1 the annual value of the property, or
2 the rent paid by the employer
The taxable bene�t is reduced by any contribution
made by the employee
Furniture provided to an employee is taxed at 20%,
as it is treated as a loaned asset
November 20, 2022 3 / 16
BIKS: Expensive Living accommodation
IF Property Cost > ¿75,000 ⇒ Taxable Bene�t increases
Increase in Taxable Bene�t = Interest rate x (Property Cost – ¿75,000)
Property Cost =
1 Purchase price
2 the cost of any improvements made
before the start of the tax year
3 any capital contribution made by the employee in the tax year
If the house was owned by the employer for more
than 6 years before occupation by the employee,
the market value at occupation may be substituted for cost.
November 20, 2022 4 / 16
BIKS: Job-related accommodation
No taxable bene�t arises,
IF the Job-related accommodation is either:
1 necessary for the proper performance of the duties, or
2 provided for security reasons, or
3 provided for better performance of the duties,
and this is customary
November 20, 2022 5 / 16
Cars for private use
1 Taxable Bene�t =
(Applicable percentage x (car’s list price – contribution)
2 the list price of the car when new
3 a capital contribution made by an employee ≤ ¿ 5,000
4 the applicable percentage depends upon the car’s emission rating
5 there is an additional 4% for most diesel cars
6 In all cases:
Taxable Bene�t ≤ 37% of car’s list price
7 The taxable bene�t is reduced proportionately if:
the car was not available for the whole tax year, or
the car is o� the road for at least 30 consecutive days
8 amount paid by the employee towards running costs,
other than fuel, reduces the taxable bene�t
November 20, 2022 6 / 16
Applicable
emissions Percentage
1-50g/km (*) 2% to14%
51g/km to 54g/km 15%
55g/km to 59g/km 16%
60g/km to 64g/km 17%
65g/km to 69g/km 18%
70g/km to 74g/km 19%
75g/km 20%
If emission rating is over 75g/km,
then it is rounded down to the
nearest 5g/km
There is a1% increase, for each
additional 5g/km over 75g/Km
(*) depending on electric range
November 20, 2022 7 / 16
Car fuel for private use
Taxable Bene�t = Applicable Percentage x ¿25,300
the amount ¿25,300 is �xed for Tax Year 2022-2023
IF the employee pays for all private fuel,
THEN there is no taxable bene�t
the taxable bene�t is not reduced by any partial payment
Note: “Fuel” in this case does not include electricity nor any
forms of energy that can not emit carbon dioxide.
�����������������-
A personal note:
I sometimes wonder how much carbon dioxide is emitted
in producing electricity.
November 20, 2022 8 / 16
Bene�cial loans
a loan granted to an employee either Interest-free
or at an Interest rate (IRe)
below the o�cial Interest rate (IRo)
Taxable bene�t = Loan x (IRo – IRe )
IF all loans outstanding during the tax year ≤ ¿ 10,000
THEN there is no Taxable Bene�t
November 20, 2022 9 / 16
Income from Employment: Basis of assessment1
Employment income is assessed in the tax year in which it is
received not earned
Income is normally deemed to be received on the earliest of:
1 the date that the income is actually received by the employee
2 the date that the employee becomes entitled to receive the income.
1Please revise what we studied about this topic last year
November 20, 2022 10 / 16
Taxable Income from Employment: Main types
Wages and salaries
Bonuses, commissions and fees
Expense allowances
Payments made on termination of employment
Pensions arising from employment
Bene�ts in kind
Certain social security bene�ts, such as:
state retirement pension, statutory sick pay,
maternity pay, and paternity pay
November 20, 2022 11 / 16
Non-taxable Income from Employment: Main types
Trivial bene�ts in kind ≤ ¿50
free or subsidised meals in a sta� canteen
Sta� parties (within limits)
Provision of a parking space
Approved mileage allowances (next slide)
Removal expenses up to ¿8,000
one mobile telephone for both business and private use
Workplace childcare, sports or recreation facilities
Employer’s contributions to a registered pension scheme
November 20, 2022 12 / 16
Mileage allowance
AMAP = Approved Mileage Allowances Payment
AMAP: 45p2 per mile for the �rst 10,000 miles of business travel,
25p per mile thereafter
IF Mileage allowances are less than AMAP,
THEN they are tax-free
IF the mileage allowance received exceeds AMAP,
THEN the excess is taxable.
IF the mileage allowance received is less than AMAP,
THEN the de�cit is a deductible expense.
245p = 45 pence = ¿ 0.45
November 20, 2022 13 / 16
Tax Deductible expenses
Contributions to an occupational pension scheme,
if deducted from pay by the employer
Subscriptions to relevant professional bodies (e.g. ACCA)
Travel and subsistence expenses necessarily incurred
in the performance of the duties of the employment
Other expenses incurred wholly, exclusively and necessarily3
in the performance of the duties of the employment
3Lawyers’ talk
November 20, 2022 14 / 16
Termination Payments
Termination payments are exempt from tax, if:
1 made on the death of the employee
2 made because of injury or disability
3 lump sum payments made under registered pension schemes
Termination payments that are fully taxable:
1 Payments to which an employee is contractually entitled
2 Payments as reward for an employee’s services
3 Payments in lieu of4 notice (PILONs) for termination
4 statutory redundancy payments (SRP)
Termination payments that are partially exempt:
1 Discretionary (“ex gratia”) payments: up to ¿30,000 less SPR
Example: Miss Suzhou receives SRP = ¿4,500, and ‘ex gratia’= ¿40,000
1 SPR is Exempt, Exempt part of ‘ex gratia’ = 30,000 – 4,500 = 25,500
2 Taxable part = 40,000 – 25,500 = 14,500
The Taxable part is treated as the top slice of Income,
after Dividends, Savings, and Non-savings
4’in lieu of’ means instead of
November 20, 2022 15 / 16
SPR is Tax Exempt
Thank you very much for attending this lecture
It is time for questions, comments, and suggestions.
(www.menti.com, code: )
November 20, 2022 16 / 16
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