Reference no: EM133041589

Question - Part a - The Following information relate to Ryan Hughes for tax year 2019-20

Ryan Hughes is a finance director of TDW Ltd. His remuneration is £92,000 per annum (PAYE £24,300).

During 2019-20, Ryan is provided by his employer with the use of a petrol-driven car first registered in 2016 with a list price at that time of £21,000. His employer bought the car for £16,700 in 2018.Ryan contributed £6,000 towards the cost of the car. The car's emission rating is 121g/km.

TDW Ltd also provided Ryan with fuel for private journeys. Ryan pays the company £50 per month for the use of the car.

TDW Ltd, in addition, pays £4,500 medical subscription for Ryan.

Ryan receives £15,000 rent from the letting of her property. He also receives £5,000 interest from her building society account and £400 interest from his ISA and also dividends of £8,500 from the shares he received from his grandfather.

Ryan pays £503 professional subscription.

Ryan makes a personal pension contribution of £20,000 to a registered pension Scheme.

Ryan was given a company loan of £50,000 on 5th August 2019 on which he is charged interest of 1%.

Ryan is provided with the use of company house to the value of £8,000 annually (TDW Ltd purchased the property for £300,000 in December 2016). TDW limited has made some improvement during October 2019 costing £35,000. Ryan does not contribute towards the cost of the house or towards its running costs, which cost the company £700 in 2019-20. The company has also furnished the house at a cost of £4,000. Ryan's occupation of the house is not job-related.

TDW provides a free meal to Ryan which is also available to all employees. The cost of free meal to company was £1,200 in tax year 2019-20.

You are required to:

I. Calculate Ryan 's total income tax liability for the tax year 2019/20. Assume that the official interest rate is 2.5%.

II. Re-calculate Ryan's total income tax liability for the tax year 2019/20 without any personal pension contribution to a registered pension scheme.

Part b - Andrew has been trading for many years making up accounts to 31 March and has the following projected trading profits (after capital allowances) for the next two periods of account:

Year ended 31 March 2019 £45,000

Year ended 31 March 2020 (£31,000)

Andrew expects to have the following amounts of other income /gains in the next two tax years:

2018/19 2019/20

Employment income 26,850 26,850

Chargeable gains* 30,700 15,700

*Andrew's gains are not related to residential property and do not qualify for entrepreneur's relief.

Requirement - Assuming the personal allowance is £12,500 and the CGT annual exempt amount is £12,000 for all years concerned, calculate the maximum tax saving if Andrew uses his trading loss as efficiently as possible (assuming Andrew does not wish to carry any loss forward).