Benefits in kind

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. Mr De Vries is a director of Swan Ltd and receives an annual salary of £18,000 per annum. On 6 April 2009, as a reward for his hard work, his employers buy him a new hi-fi system costing £6,000 + VAT. He received no other benefits in kind during the year. How much is the taxable benefit in kind for 2009/10?

  2. Mr Rangel is an employee of Cygnet Ltd earning a salary of £55,000 per annum In 2009/10, Mr Rangel takes out a private medical insurance policy in his own name at a cost of £1,400 on 1 May 2009. His employers decide that as it is in their interests for him to remain fit and well, so on 1 June 2009 they reimburse him with the cost of the premium. How should this be reported to HMRC and what class(es) of NIC would be payable thereon?

  3. Mr Trundle is a director of Paulo Ltd. As part of his remuneration package, he has the use of a new company Fiat Pintado. The car has a list price of £22,000 but the company managed to secure a deal with the local dealer and paid £20,000 for the car. The car has a CO2 emissions figure of 108 g/km and runs on unleaded petrol. The car had an optional stereo system fitted at an additional cost of £1,000. Mr Trundle had use of the car for the whole of the 2009/10 tax year and does not receive fuel for private purposes. What would Mr Trundle's car benefit be for 2009/10?

  4. Mr Pratley is an employee of Liberty Ltd and receives the use of a company Noble car, which runs on petrol and has a CO2 emissions figure of 254 g/km. The car was available for use by Mr Pratley for the entire 2009/10 tax year. His employer also provides fuel for Mr Pratley's private motoring and, during the 2009/10 tax year, spends £3,000 on petrol for private purposes. Mr Pratley reimburses his employer with £50 per month towards the cost of private fuel. What would be Mr Pratley's fuel benefit charge for 2009/10?

  5. Mr Dyer is a director of Sousa Ltd and he has overdrawn director's loan account at 6 April 2009 of £100,000. On 31 July 2009, he repays £20,000 and a further £20,000 on 31 March 2010. He pays Sousa Ltd interest the overdrawn balance of £1,000 during the year ended 5 April 2010. What will be his beneficial loan interest that needs to be reported on his form P11D for 2009/10? Assume a beneficial loan interest rate for 2009/10 of 4.75%

  6. Bessone Ltd owns a yacht, with a market value of £400,000, which it provides to its employee, Mr Allen, for the entire 2009/10 tax year. Mr Allen pays his employers £10,000 for use of the yacht. What will be the 2009/10 Class 1A NIC liability on the provision of the yacht?

  7. During 2009/10, Monk Ltd provides private medical benefit to its employees at a total cost of £20,000. It also pays travel and subsistence expenses on behalf of its employees, which are subject to a dispensation agreement with HMRC. What will be the company's class 1A NIC liability be 2009/10?

  8. Which one of the following does not fit the general criteria of items that are eligible for a PAYE Settlement Agreement?

  9. In smaller entities such as single-director companies, it may not be possible to independently verify expenses included within a dispensation, what is HMRC's recommendation in these circumstances?

  10. Which of the following statements is correct in relation to dispensations and PSAs?